Lake Tahoe-based Harveys offers to buy Boomtown Hotel-Casino
RENO, Nev. (AP) – Harveys Casino Resorts based at Lake Tahoe is offering to buy the parent company of Boomtown Hotel-Casino on Interstate 80 just west of Reno.
The cash deal worth $675 million would give Harveys a long-sought presence in the Reno area and make it one of the seven largest gaming companies in the country, with annual revenues exceeding $1 billion.
The purchase also would require Harveys to assume about $400 million in debt.
If the debt goes through, Harveys would pay $25 per common share of stock of Pinnacle Entertainment Inc., based in Glendale, Calif. It formerly was known was Hollywood Park Inc.
Pinnacle owns and operates eight casinos in Mississippi, Louisiana, Argentina and Nevada – including Boomtown in Verdi west of Reno. Two of the Mississippi are pending sale.
Pinnacle also is building a riverboat casino and hotel in Indiana, gets lease income from two California card club casinos and operates an Arizona horse track that is pending sale.
”I think $25 is a good price, probably for both sides,” Smedes Rose, a gaming analyst for Robertson Stephens in New York, told the Reno Gazette-Journal.
Rose’s firm ranks Pinnacle stock a ”buy” and had a 12-month price target of $25 on its stock, which closed Wednesday at $21 in heavy New York Stock exchange trading, up $1.75 or 9 percent from Tuesday’s close.
”We think (Pinnacle) management will consider this very carefully,” Rose said.
Pinnacle, as Hollywood park, bought Boomtown Inc. in 1997, acquired Casino Magic Corp. in 1998 and was considered to be shopping for opportunities.
It has been divesting its non-casino assets and using the cash raised to retire debt and finance its new Belterra resort in Indiana.