Casino operator Aztar gets a rival bid

Casino operator Aztar, which owns the Tropicana in Las Vegas and Atlantic City received a higher bid from Colony Capital than the previous high bidder, Pinnacle Entertainment. Colony Capital is a privately held real estate concern that owns the Hilton hotels in Vegas and AC.

"Colony will offer $41 ($1.5 billion) a share and would seek to refinance the $723 million in debt that Aztar carries, the company said. On March 14, Pinnacle of Las Vegas offered $38 a share for Aztar, or about $1.45 billion, not including the debt."

"Shares of Aztar hit a 52-week high after reports of Colony's offer surfaced. In 4 p.m. composite trading on the New York Stock Exchange, Aztar's stock was up $3.37, or 8.6%, to $42.42. Pinnacle added 23 cents to $29.23 on the NYSE."

This could turn into a bidding war. Aztar is attractive not because of the profitability of its casinos, but rather the value of the real estate it sits on. Vegas is hotter than ever, and land on the strip is a finite thing.

"More than half of Aztar's income last year came from its refurbished and expanded Tropicana property in Atlantic City. Aztar's crown jewel in Las Vegas isn't the faded hotel and casino sitting on the city's famed Strip, but the 34 acres of prime land it sits on.

For years, Aztar has discussed redeveloping the land, which is close to the Las Vegas airport and across the street from major MGM Mirage properties. The company never disclosed any firm plans and Pinnacle Chief Executive Dan Lee said earlier this month that his casino company would possibly develop a multibillion-dollar resort property at the site."