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Aztar buyer happy with $2.75 billion deal



Printer Friendly VersionPost a CommentTell a Friend about this Article12 June 2006
As reported by: Business Journal of Phoenix
Gaming industry experts say Bill Yung is paying too much to acquire Phoenix-based Aztar Corp., the publicly traded parent company of the Tropicana casinos in Las Vegas and Atlantic City, N.J.

Yung's Columbia Sussex Corp. agreed May 19 to pay $2.75 billion for the company, topping a rival bid from Pinnacle Entertainment Inc. by more than $100 million.

Experts question whether Yung can get a return on his massive investment. But six days after the deal was signed, Yung said he was willing to pay even more.

"My breaking point was higher than theirs," Yung said of the bidding war with Pinnacle. "They knew I could outbid 'em."

As it happened, gaming analyst Cory Morowitz pegged Yung's purchase at nine times EBITDA (earnings before interest, taxes, depreciation and amortization), placing it at the high end of recent casino acquisitions.

Morgan Joseph & Co. analyst Adam Steinberg started questioning the economics of the deal once bidding reached $43 per share. Yung's winning bid came in at $54 per share.

Christian Marfels, an economics professor in Halifax, Nova Scotia, agreed the deal is too rich.

"Tropicana (Las Vegas) is an old property. It couldn't compete. What do you get for your money? You get the land. That casino has to be imploded," he said.
Article By: Business Journal of Phoenix

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