Merv Griffin Selling Resorts Casino to Sun International Hotels
NEW YORK (AP) _ Entertainer Merv Griffin has sold the Resorts casino in Atlantic City, N.J., to a South African developer looking to stake a claim in the U.S. gambling industry.
Sol Kerzner announced Monday he will buy Griffin Gaming & Entertainment Inc., which owns Resorts, for $210 million. Griffin, chairman of Griffin Gaming and owner of 25 percent of its stock, has agreed to the deal. He will remain involved in entertainment at Resorts.
The purchase represents Kerzner’s second foray into the United States and his first into Atlantic City. His Sun International Hotels Ltd. is set in October to open a new hotel and casino on tribal land in Connecticut. It will be called the Mohegan Sun Resort.
``We have for some time expressed an interest in entering the Atlantic City market. It’s one of the biggest gaming markets in the world,″ Kerzner said at a news conference, standing side-by-side with Griffin.
``And so from our standpoint we have the ability to enter it by buying and merging up with Merv’s company,″ he continued. ``It puts us in business almost immediately.″
Sun’s offer represents a big markup for Griffin Gaming shareholders, close to double Griffin’s closing price on Friday.
Reacting to the news after being halted late Monday, Griffin stock rose 58 percent today, or $7.12 1/2 a share, to $19.37 1/2 by late morning on the American Stock Exchange. Sun shares fell $3.75 to $48 each on the New York Stock Exchange.
Kerzner’s Sun is based in the Bahamas and it operates casinos there, including the Paradise Island resort. It has an interest in casinos in France as well, and the Griffin purchase makes it the most recent to move into Atlantic City. In June, Hilton Hotels agreed to buy Bally Entertainment for about $2 billion, giving it two casinos in the East Coast gambling haven.
Resorts was the first casino to operate in Atlantic City, opening its doors to gamblers in 1978.
Sun’s designs on the area have been clear for some time. Kerzner recently applied for a license to build a $700 million, 2,000-room project in Atlantic City. He said in the long term that remains on the drawing board, but made clear his first priority would be further developing Resorts.
Griffin purchased the hotel and casino in 1988 from controlling shareholder Donald Trump in a deal that included the unfinished Taj Mahal, which he sold back to Trump.
Today, it is one of 13 casinos in the city. It has changed its name to Merv Griffin’s Resorts Casino Hotel and announced plans for a $200 million expansion to double its capacity. That will move ahead.
``My role?″ Griffin said at the news conference. ``Continuing what I have done, the entertainment aspect of it.″
Griffin mentioned television broadcasts as well as a role in developing marketing strategies, although he will hold no executive position at Sun. He has extended his existing agreement with Resorts for four years, which will include a role at Paradise Island and the Mohegan Sun Resort.
After the deal, Griffin will be one of Sun’s largest stockholders with about 4 percent of the company. He also remains a big investor in gambling with a 16 percent stake in Player’s International. His privately held Griffin Group also owns and operates non-gambling hotels like the Beverly Hilton.
Terms of the deal call for Griffin stockholders to receive 0.4324 share of Sun stock for each share they own. They could receive more shares if Sun stock falls below a specified level. Griffin Class B shareholders, a small group, would receive Sun stock at a ratio of 0.1928.
Based on Friday’s closing prices, the purchase comes to about $210 million. Sun will also assume about $147 million of Griffin debt and $55 million to $60 million of cash now on Griffin’s books. That makes the entire deal worth about $300 million.
Atlantic City is seen as a particularly lucrative place to invest in gambling these days. In January 1995, the state passed a deregulation bill that made it easier for companies to operate gambling facilities in the state. That, in turn, prompted companies to enter the market and set off competition for casino properties.
The deal for Griffin has been approved by both companies’ directors but still needs approval from the New Jersey Casino Control Commission as well as both companies’ stockholders. Sun said it is expected to be complete early next year.