This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Boyd Gaming Rolls the Dice on Casino Deal

NEW YORK ( TheStreet) -- In rolling the dice on a $1.45 billion acquisition of Peninsula Gaming, heavily indebted Boyd Gaming (BYD - Get Report) is taking one of the more notable recent gambles in the risk-fueled casino industry.

The move may prove to be a well-timed push into southern and Midwestern economies after Boyd was unsuccessful in a larger play for Station Casino's -- as well as a diversification away from the hyper-competitive Las Vegas and Atlantic City gambling markets -- but the acquisition will add roughly $1 billion to already high debt levels and the prospect of shareholder dilution.

If it's to be the "transformative" deal for which Boyd has been searching, though, it's a gamble that hinges on the U.S. economy avoiding a slowdown. Initial analyst and shareholder reaction was mixed, and suggest the deal won't propel shares from the single digits and anywhere near pre-recession highs.

"Acquiring Peninsula Gaming is a transformative transaction that fits perfectly into our growth strategy by expanding our company's scale, diversifying our platform, strengthening our financial profile, and generating meaningful value for our shareholders," said Boyd Gaming CEO Keith Smith in a late Wednesday press release. Boyd will pay for the deal using $200 million of cash and by issuing $1.2 billion of debt.

Smith may be correct on the growth potential and diversification benefits, however, saddled with roughly $3.5 billion in debt, Boyd Gaming may not have the cash to pay off the $1.45 billion offer.

Such a dilemma is normally the case within the casino industry, which operates with large debt levels and is highly exposed to economic swings that may cause consumers to either ramp up or clamp down on leisure spending. Companies like Las Vegas Sands (LVS), Wynn Resorts (WYN) and Caesars Entertainment (CZY) are all taking risks to diversify into non-Las Vegas and Atlantic City markets in a push to bump up profit margins.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BYD $20.35 0.00%
CZR $8.09 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs