Perhaps this is what happens when you outsource your business coverage to India, but Reuters had a story yesterday positing MGM Mirage and Harrah's Entertainment as two of the likeliest buyers for Ameristar Casinos.
Uhhh, I hate to break this to Reuters, but MGM just came up $3 billion and change short on CityCenter and Harrah's is debt-strapped. So I'd say they've got their hands full. How either one would be able to swing an Ameristar acquisition is an open question. Harrah's also faces redundancy issues, as it already owns riverboats in three of Ameristar's key markets — Council Bluffs, Iowa, and St. Charles and Kansas City, Mo. Why MGM would feel a sudden hankering for Black Hawk, Colo., plus a brace of casinos in Jackpot, Nev., is even more of a poser.
Reuters' third suggestion, Boyd Gaming, seems a lot closer to the mark. With Echelon temporarily in the deep freeze and Boyd's Blue Chip riverboat leaking market share, a passel of regional casinos in markets where Boyd doesn't currently operate could provide welcome cash flow, shore up the company against its current non-presence on the Strip, and expand the web of properties from which Boyd could funnel players into its downtown Vegas cluster or (eventually) Echelon. Of course, Boyd may still be smarting from a failed Kansas City venture a decade ago, but Ameristar's assets are proven performers.
Besides, it's a company that could use some helmsmanship, having seemed to drift since the demise of CEO Craig H. Neilsen. Although paralyzed from the neck down and often bed-bound (which I've heard resulted in some very unconventional corporate meetings), Neilsen achieved more from the neck up than most able-bodied people do in their entire lifetimes. His successor, ex-Harrah's exec John Boushy, tried to sell the Ameristar people on a change of corporate culture but they didn't want to hear about it. So, given an evident leadership vacuum, a change of ownership makes sense.
Unless Penn National wants to take its $1 billion-plus in "mad money" and go after Ameristar, there aren't too other many potential acquirers abroad in the land. James Packer has already sworn off. Pinnacle Entertainment would rather build than buy. Tribal giant Mohegan Sun has been flexing its financial muscle of late and rates as a longshot candidate (but just came off a wretched second quarter). Beyond that … who knows?
