Small casinos could profit from big casino mergers

August 25

The two pending casino company mega mergers that will no doubt change the landscape of the gaming industry have raised the profile and value of some of the smaller, non-corporate properties, some casino executives say.

Executives of some of the independent companies state that while they may have a rougher time competing against the corporate giants that would emerge from the joining of MGM MIRAGE with Mandalay Resort Group and Harrah's Entertainment Inc. with Caesars Entertainment Inc., some say their own properties have become more valued commodities.

Some already have cashed in on that value by lining up their own deals. Real estate mogul Donald Trump has signed on to develop the Trump International Hotel and Tower on property near the New Frontier hotel-casino and the Hooters restaurant chain will put its brand on the Hotel San Remo.

The board of directors of the Riviera Holdings Corp., operators of the Riviera hotel-casino on the Strip, on Monday rejected what was announced as a friendly offer of $12 a share from current investor D.E. Shaw Laminar Portfolios, New York, for the company's assets, which also include the Riviera Black Hawk in Black Hawk, Colo.

A spokesman for Laminar said Tuesday he had no comment on whether the company would make a new bid for the property.

While a statement from the Riviera board mentioned some concerns about the Laminar bid's not addressing regulatory issues involved with Riviera's plans to construct a hotel-casino in Jefferson County, Mo., it's been clear that the Riviera is not in any hurry to sell.

William Westerman, president and chief executive of the company, said about a dozen inquiries about acquiring the Riviera have reached him in the past year, even before the Laminar bid arrived through a Securities and Exchange Commission filing on Friday.

Westerman said in a recent interview that the company would stay where they are until they receive an offer that they couldn't refuse.

Other hotel-casino managers say the two merger deals, which aren't expected to be completed until next year, have raised the profile of their own properties, but managers are split over whether it would be harder to compete against the new giants and whether they consider their properties to be any more valuable.

An executive with the Tropicana hotel-casino said the corporate expansion that is happening all around his property could turn into an advantage because the smaller operations would be able to respond faster to changing market conditions.