Nevada-based Station Casinos has inked a deal to acquire the Palms Casino Resort in Las Vegas for a total cash consideration of $312.5m.
On Tuesday, Red Rock Resorts Inc – Station’s new corporate moniker following last month’s initial public offering – announced that it had signed a definitive agreement to acquire the Palms from its private equity owners. The deal is expected to close in Q3 2016 and Red Rock said it would disclose more details during its Q1 earnings call on Thursday.
Red Rock VP/CFO Marc Falcone called the Palms “a hybrid gaming property” that appeals to both local residents and tourists alike. Falcone said the Palms would be “a compelling strategic addition” to the Red Rock/Station stable, which now consists of 20 properties, most of which cater to the Las Vegas locals market.
The release accompanying the sale said Red Rock – which “manages and owns a significant indirect equity interest in” Station Casinos – expects the Palms to generate $35m in earnings during its first year under Red Rock’s control, once the “anticipated synergies” are factored in.
Last month’s Red Rock IPO was the biggest of its kind so far this year, raising $531m, most of which was controversially destined to go towards Frank and Lorenzo Fertitta. Under the terms of the IPO, Red Rock was committed to buying the brothers’ Fertitta Entertainment for $460m minus debt, and the brothers received 87% of the voting power in the new Red Rock entity.
The brothers took Station private for $5.4b in 2006 but filed for bankruptcy three years later. The company emerged from bankruptcy in 2011 after making $4b in debt disappear but with the brothers still firmly in charge.
Red Rock’s deal follows two recent off-Strip purchases by rival operator Boyd Gaming, which paid $230m for two Cannery Casino Resorts properties and $380m for the Aliante Casino in North Las Vegas last month.