Boyd Bids for Station Casinos Again

Boyd Gaming BYD has submitted a proposal to Station Casinos' board of directors, indicating its intent to acquire the firm out of bankruptcy for $2.45 billion in cash and assumed debt. Boyd has been interested in Station for some time now; its first offer in February totaled $950 million for a portion of Station's assets and was rejected. Adding Station to the portfolio would bolster Boyd's presence in the Las Vegas locals market, which has struggled amid the downturn as consumer spending tightened and the segment faced heavy pressure from aggressive discounting on the Strip. The company believes it can handle the acquisition using its existing credit facility. As of September, the firm had $2 billion of availability on its revolver. In our opinion, Boyd has one of the strongest balance sheets among casino operators, although this deal would increase its leverage and leave less breathing room. We are leaving our fair value estimate unchanged for now, but we continue to monitor the situation as events unfold.