Las Vegas-based Boyd Gaming agreed to pay 0 million to buy two Cannery Casino properties from Crown Resorts.
“This transaction is a great tuck-in acquisition that further expands our presence in the Las Vegas locals market at an attractive price,” Boyd Gaming President and CEO Keith Smith said.
The Eastside Cannery Casino and Hotel is located next to Boyd Gaming’s Sam’s Town Hotel & Gambling Hall on the Boulder Strip. It has a 64,000-square-foot casino, 20,000 square feet of meetings and events space, more than 300 hotel rooms, and a 250-seat lounge, among other amenities.
The Cannery Casino Hotel in North Las Vegas has 200 rooms, an 80,000-square-foot casino, five restaurants, five bars, a 30,000-square-foot entertainment theater, and a 14-screen movie complex. The casino has no competitors within a 5-mile radius.
The two Cannery casinos add to the Aliante casino in North Las Vegas, which Boyd Gaming agreed to buy last week for $380 million.
“Aliante is an asset without rival in the North Las Vegas market [and is] strategically positioned to benefit from substantial future growth across the northern part of the Las Vegas Valley,” Smith said in a statement announcing the Aliante deal last week.
Smith said the North Las Vegas market is growing in importance, particularly with a new electric car plant being built there.
“Aliante and Cannery Casino will give us a strong foothold in North Las Vegas, one of the fastest-growing areas in the Las Vegas Valley,” Smith said. “Our southern Nevada assets have delivered the strongest revenue growth in our company over the last two years, and this acquisition will broaden our portfolio in this promising market.”
Deutsche Bank analyst Carlo Santarelli said the deal is a good one for Boyd Gaming, whose B Connected players program would include the Aliante and likely boost the casino’s revenues by more than 9 percent this year. The deal also should streamline and reduce the costs of the casino’s support services.
The deals give Boyd Gaming a strong presence in the $270 million North Las Vegas gaming market, while expanding its properties on the Boulder Strip. North Las Vegas recently was named the site of Faraday Future’s $1 billion electric car plant, which is to open in 2018 and expected to generate more than 13,000 direct and indirect jobs in North Las Vegas.
With a positive economic outlook, several analysts say the Las Vegas locals market produced 5 percent year-over-year growth rate last year, with $158 million in revenues.
The amount underperformed expectations by about 3 percent, but Boyd Gaming says locals casinos generated greater revenues and EBITDA as the local economy continues improving.
Boyd Gaming also posted profits the past seven consecutive quarters, and $33.2 million in earnings on $552.4 million in revenues for the quarter ending March 31.
The acquisitions are expected to be completed during this year’s third quarter. Once done, Boyd Gaming will have a dozen casinos in the Las Vegas area, and give it a larger share of the locals market.
Boyd Gaming currently owns and operates the California Hotel, Fremont, Main Street Station, Sam’s Town, Suncoast, The Orleans, Gold Coast, Eldorado, and Joker’s Wild casinos in Clark County.
Another impact of the pending sale of Cannery Casino Resorts in Las Vegas to Boyd Gaming Group is that it heralds the end of Crown Resorts’ and James Packers’ first gamble on the U.S. gaming market.
Packer owns 53 percent of Crown Resorts, which in 2007 paid $1.75 billion to buy Cannery Casino Resorts. The deal included four casinos in Nevada and Pennsylvania. Cannery was founded by two Nevada gaming veterans, Bill Wortman and Bill Paulos.
Unfortunately for Packer and Crown Resorts, the deal came just ahead of the Great Recession, which crippled the gaming industry and resulted in billions of dollars in impairments wiping out Cannery Casino Resorts’ value.
Cannery since has sold the Meadows Racetrack and Casino in Pittsburgh, leaving it with three Nevada casinos. Crown did not earn any money from Cannery last year, but it did pay nearly $62 million in legal settlements and other costs.
If Crown Resorts eventually sells Cannery to Boyd Gaming, any money it would receive instead will go to pay off debts accrued.
Crown Resorts still is on the hook for some $362 million in taxes and penalties the Australian government wants from it for its unsuccessful venture into the U.S. gaming market.
Crown Resorts also is a majority partner in the proposed $2 billion Alon casino and resort development on the north end of the Las Vegas Strip, but Crown is trying to sell down its 74 percent stake in the project, which is proceeding slowly. Officials estimate a 2019 opening for Alon, but sources tell GGB News that little financing has yet been lined up for the luxury property, and Crown is reluctant to add more money to the project.
