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Colony makes $5bn bid for Station Casinos

Los Angeles-based Colony Capital is backing management in a $5bn take-private of casino group Station Casinos.

Gaming company Station Casinos, which owns 12 Las Vegas-area casinos, has received a buyout offer from its management and Los Angeles-based private equity real estate firm Colony Capital worth around $4.7 billion (€3.5 billion).

Station executives and siblings Frank Fertitta, chairman, and Lorenzo Fertitta, president, are working with Colony to offer $82 per share for the company, a 19 percent premium to its closing price on Friday. According to a statement released by Station, the company received the proposal on Saturday and has convened a special committee to consider the offer.

Colony, which has invested in high-profile hotel and pub chains, is no stranger to the gambling business, having made its name with investments like US-focused RIH Casino Resorts, mid-cap gaming company Harvey’s Casino Resorts and destination specialist Kerzner International, owner of Caribbean resort Atlantis and the Mohegan Sun casino in Connecticut.

Last year, the firm acquired the Las Vegas Hilton, along with four additional US casinos. Overseas, the firm made an investment in Groupe Lucien Barriere, the largest casino operator in Europe.  

Long considered to be risky investments—not to mention a nightmare with it comes to gaming licenses—casinos are finding themselves the target of increased interest from buyout firms. Earlier this year, Harrah’s Entertainment, the biggest casino company in the world, received a $15.5 billion takeover offer from private equity firms Apollo Management and Texas Pacific Group.

Bloomberg estimates that there have been more than $26 billion in proposed gaming deals in 2006, more interest than the previous five years combined.