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Posted At : January 13, 2009 11:51 AM | Posted By : D McKee
Related Categories:
Tilman Fertitta,Penn National,Station Casinos,Economy,Harrah's,Wall Street
Shares of Landry's Restaurants (LNY) ended trading Friday at $12.35/share and opened Monday at $7.16 -- a 42% plunge. Starting the week by telling investors that your latest takeover attempt has gone belly-up will do that. Although the relevant SEC filing was posted on Thursday, amazingly the market didn't react until Monday morning's press release.
This is CEO Tilman Fertitta's second busted effort to take Landry's private (the first was priced at $21/share, the second at $13.50). If he keeps at it, pretty soon he'll be scarfing up stock at a dime per share. Doing the same thing over and over but expecting a different result is the standard definition of insanity but in this case Fertitta may be crazy like a fox. Taking a pummeling on his personal worth might be an acceptable tradeoff for him if the result is sole control of Landry's at a steep discount.
Heaven knows, the SEC was right to balk at secret clauses between Fertitta and his bankers. Regardless of how innocuous these top-hush provisos might have been, if something of a material nature can't be disclosed to shareholders, such "unusual circumstances" are sufficient motive to nix the deal.
Given the outcome of the last three gaming-sector LBOs (Harrah's Entertainment, Station Casinos and an aborted one at Penn National), you might question the advisability of attempting yet another, especially now. But, amazingly enough, Fertitta is able to keep lining up the requisite capital, so his bankers must like what they see on his balance sheets ... propped up in no small measure by the two Golden Nugget properties, which represent a considerable plurality of Landry's revenue.
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