MGM Resorts has completed its acquisition of Atlantic City’s Borgata Hotel Casino & Spa, acquiring Boyd Gaming’s 50 percent share of the property.
Nevada-based Boyd gaming said in a press statement that it received $589 million from the transaction, after deducting its share of Borgata’s currently outstanding debt. The company will use the proceeds to pay down debt and for “general corporate purposes.”
The amount could be higher as it does not include Boyd Gaming’s 50 percent share of any future property tax settlement benefits with Atlantic City. According to the Associated Press, the Borgata, estimates it is due property tax refunds totaling $160 million, including amounts due under court decisions rendered in its favor and estimates for open tax appeals.
“As the premier resort in Atlantic City, Borgata is a great addition to our growing presence in the mid-Atlantic and Northeast United States,” said Jim Murren, chairman and CEO of MGM Resorts in a press statement. “We are excited to welcome the talented Borgata leadership team and employees into MGM Resorts and look forward to serving guests with new and exciting opportunities.”
The deal gives MGM control of Atlantic City’s leading casino. The sale involved Boyd giving up its 50 percent ownership of Marina District Development Holding Co. LLC, Borgata’s parent company, according to the AP.
MGM Growth Properties LLC will acquire the Borgata’s real property from MGM Resorts and lease back the real property to a subsidiary of MGM Resorts. A subsidiary of MGM Resorts will then operate the Borgata.
Borgata’s customers will see their Borgata rewards accounts automatically changed over to MGM’s rewards program in 2017.
The two companies had been partners in the Borgata since it opened in 2004, but Boyd has been the operator of the casino as MGM faced regulatory problems in the state and its half of the casino was held in trust.
Those problems led to MGM attempting to sell its half of the casino in 2010 rather than cut ties to an Asian business partner in Macau that was complicated its regulatory approval in New Jersey. No buyer was found however and in 2014, declaring that conditions with its Macau business partnership had sufficiently changed, New Jersey casino regulators allowed MGM back into the Atlantic City market.
The deal also allows MGM to use the Borgata database to market to potential customers for its two new east coast casinos, MGM National Harbor in Maryland and MGM Springfield in Massachusetts. Both MGM and Boyd were prohibited from using the list to promote anything but the Borgata.
