Las Vegas gaming company MGM Resorts International (MGM) on Tuesday agreed to buy out its 50% partner in Atlantic City's Borgata Hotel Casino & Spa just days after the state of New Jersey approved a bailout package that will help the cash-strapped city's gaming industry.
MGM would pay activist target Boyd Gaming (BYD) $900 million for the half of Borgata it doesn't already own and also assume the hotel and casino's remaining $600 million in liabilities. MGM, in turn, will sell Borgata's real estate to the MGM Growth Properties (MGP) real estate investment trust it created earlier this year for $1.175 billion in a sale-and-leaseback agreement.
"While the market continues to experience challenges, Borgata has outperformed and differentiated itself as the undisputed leader in the city. Our decade-long partnership with Boyd Gaming has been a great one," said MGM Chairman and CEO Jim Murren in a statement.
The state legislture passed, and Gov. Chris Christie signed, a bailout last week. The measure gives the city five months to get its finances in order or the state will step in. In the meantime, the state will give Atlantic City $75 million in loans and allow it to receive at payments from casinos rather than property taxes for the next 10 years.
The seaside city is reeling after competition from other casinos in New York, Pennsylvania, Connecticut and other states hammered interest in Atlantic City and led to the closure of four of its 12 casinos.