Takeover speculation helps boost Aztar Corp. shares

STAFF AND WIRE REPORTS

Shares of Aztar Corp., operator of the Tropicana casinos in Las Vegas and Atlantic City, have risen to their highest levels in 16 months on improved earnings and speculation that the company will be acquired.

The shares were quoted at $9.0625 today, up 25 cents, on moderately heavy midday trading.

Some analysts believe Aztar could be acquired by another company that wants to develop a casino on the Las Vegas Strip. Others, however, downplay the rumors, saying there aren't any logical buyers.

The aging Tropicana casino resort in Las Vegas sits on 34 acres at the corner of Tropicana Avenue and the Strip, one of the last prime locations that could be acquired in the world's largest gambling market.

"We're at the point where there isn't too much left to develop in the grandest market of them all," said CIBC World Markets analyst David Wolfe, who rates Aztar shares "hold." "Perennially, Aztar has been a target in the consolidation game."

The Phoenix-based company has a market value of $400 million and $481 million in debt that a buyer would have to assume.

Chairman Paul Rubeli made Aztar a more likely acquisition target last year when he negotiated an option for Aztar to buy the 50 percent interest it doesn't already own in the Tropicana Las Vegas.

The company has until February 2002 to buy out its partners, the Jaffe family of Chicago, for $120 million. Buying out the Jaffes will allow the owners of the Tropicana to renovate the property or build a new resort on its site, without having to share profits with partners.

Speculation about a purchase of Aztar has heated up since May when Sun International Hotels Ltd. agreed to buy the Desert Inn casino resort from Starwood Hotels & Resorts Worldwide Inc.

Aztar Vice President Joe Cole said today the company doesn't comment on rumors.

Some analysts believe MGM Grand Inc., the casino company controlled by billionaire Kirk Kerkorian, is the most likely company to acquire Aztar. MGM Grand's flagship hotel, the MGM Grand, and New York-New York, which it gained full ownership of early this year, are located across the street from the Tropicana.

But MGM executives have indicated they are focused on developing new casinos in Detroit and Atlantic City and aren't interested in "banking land" at the Las Vegas Tropicana, despite the site's strategic location, the skeptics say.

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