Ameristar up for grabs

Having been in “stay the course” mode ever since the death of company founder Craig H. Neilsen, locals giant Ameristar Casinos is putting itself on the block. According to the New York Post, the company has hired an investment bank to explore a potential sale. J.P. Morgan analyst Joseph Greff, in an investor bulletin, notes that Ameristar “already has among the highest property level EBITDA margins in the industry and runs a tight ship,” leaving little room for improvement beyond removing duplications of effort at the corporate level.

Greff’s first thought as to a potential acquirer was the same as mine: Boyd Gaming. Its run at Station Casinos having proven futile, Boyd’s got a line of credit burning a hole in its pocket — more than enough borrowing capacity to purchase both the MGM Resorts International-owned half of Borgata and still have some “mad money” left over. True, Boyd ventured into the Kansas City market a long time and failed ignominiously. However, Ameristar’s K.C. riverboat is the top performer in the market and its sister vessel in St. Charles does pretty impressive numbers, too. Boyd would gain a valuable hedge against vagaries in the Las Vegas locals market. Because of the strong performance of most of Ameristar’s Midwestern properties, the purchase would quickly pay for itself.

Penn National Gaming, Pinnacle Entertainment and (perhaps) Harrah’s Entertainment can be safely ruled out because they already compete directly with Ameristar in a number of markets (K.C., greater St. Louis, New Orleans, East Chicago, Council Bluffs, etc.). In Missouri, especially, this would not only raise anti-trust issues, it’d leave those companies with a lot of redundant inventory. Harrah’s is wont to gobble up anything in sight, however, particularly in its current corner-the-market mode.

If the endgame is Boyd + Ameristar, though, what’s not to like?