Boyd acquires Cannery properties for $230M

Las Vegas-based Boyd Gaming has acquired Cannery Casino Resorts LLC and its two Southern Nevada hotel-casino properties for $230 million.

The deal was announced by the company Monday. There had been speculation about the transaction Wednesday when Reuters reported a deal was close to fruition, but Boyd officials would not confirm it when queried.

The acquisition of the Cannery in North Las Vegas and the Eastside Cannery on Boulder Highway along with the $380 million purchase of the Aliante Hotel in North Las Vegas will increase Boyd’s presence to 12 properties in Southern Nevada.

“This transaction is a great tuck-in acquisition that further expands our presence in the Las Vegas locals market at an attractive price,” Keith Smith, president and CEO of Boyd Gaming, said in a statement announcing the transaction. “Together, Aliante and Cannery Casino will give us a strong foothold in North Las Vegas, one of the fastest-growing areas in the Las Vegas Valley. And, we will have unique synergy opportunities at Eastside Cannery, given its close proximity to Sam’s Town.”

Smith said it made sense for the company to broaden its Southern Nevada portfolio considering the company’s strongest revenue growth has occurred in the state over the last two years.

Boyd also has properties in Illinois, Indiana, Louisiana and Mississippi and is a partner with MGM Resorts International in the Borgata in Atlantic City.

The transaction will require the approval of the Federal Trade Commission and the Nevada Gaming Commission and is expected to close in the third quarter. Boyd executives are expected to talk about the deal in greater detail when the company announces its first-quarter earnings today.

Company officials said the acquisition would be cash-flow positive and accretive to earnings per share in its first full year of ownership. The properties are being acquired with cash on hand.

The 201-room Cannery, located near Interstate 15 and Craig Road, opened in early January 2003.

The property has an 80,000-square-foot casino, five restaurants, five bars, a 30,000-square-foot entertainment venue and a 14-screen movie theater.

There are no competing gaming venues within five miles of the property. The Aliante is about seven miles away. Both the Cannery and the Aliante are popular locations for race fans because of their relatively close proximity to the Las Vegas Motor Speedway.

The Eastside Cannery has a 64,000-square-foot casino, 307 hotel rooms, five restaurants and four bars, 20,000 square feet of meeting and ballroom space and a 250-seat entertainment lounge. The property is directly south of Sam’s Town at the intersection of Boulder Highway and Harmon Avenue.

Joseph Greff, a gaming analyst with J.P. Morgan, said Boyd paid a reasonable price for the Cannery properties and Aliante at 9.8 times cash flow in the first year of operation.

“Like with the Aliante transaction, we think this acquisition makes strategic sense in increasing Boyd’s exposure to the attractive Las Vegas locals market, though we wouldn’t be surprised if there is additional capital investment in the property (unlike Aliante),” Greff said in a report to investors.

Shares of Boyd Gaming gained 17 cents, or 0.85 percent, to close at $20.20 on Monday. Volume was 2.44 million shares, roughly twice normal volume, according to Google Finance.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter: @RickVelotta.