DOW JONES NEWSWIRES
Boyd Gaming Corp. (BYD) said it won't exercise its right to
match the offer MGM Resorts International (MGM) received for its
50% stake in the Borgata resort in Atlantic City, N.J., as the
company's third-quarter profit fell 11% as results were boosted by
one-time gains.
Boyd said matching the bid received by MGM "would not provide a
sufficient return on investment" given other opportunities and the
company's current focus on reducing leverage.
MGM said earlier this month it received an offer that valued the
stake at slightly less than $250 million from an undisclosed third
party. It struck a deal with New Jersey regulators in March to sell
most of its Atlantic City assets in 18 months because gaming
officials believed MGM has a business partner in Macau with ties to
organized crime. MGM has denied the charge.
Borgata had an original price tag of $1.1 billion when it opened
in 2003. Boyd and MGM Mirage had since invested an additional $600
million as of earlier this year.
Geographically diverse Boyd, one of Las Vegas' oldest gambling
companies, has seen results pressured as unemployment and housing
woes persist--though some casino companies are expecting improved
results this quarter. Fitch Ratings downgraded Boyd earlier this
year, citing the operating woes as well as mounting debt
concerns.
Boyd reported a third-quarter profit of $5.6 million, or 6 cents
a share, down from $6.3 million, or 7 cents a share, a year
earlier. Excluding items such as write-downs and one-time gains,
earnings fell to 2 cents a share from 9 cents.
Revenue rose 50% to $595.4 million, but slid 4.1% assuming it
had controlled the Borgata a year earlier.
Analysts polled by Thomson Reuters most recently forecast
earnings of 5 cents a share on $589 million in revenue.
Operating margin on a pro-forma basis dropped to 9.2% from
13.8%.
Shares closed Friday at $7.99 and were inactive premarket. The
stock declined 4.5% this year.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com