Sun International Agrees To Buy Griffin Gaming
May 02, 2011
Sun International Hotels Inc. agreed to acquire Griffin Gaming & Entertainment Inc. for about $210 million in stock, the companies said, giving Bahamas-based Sun International and its chairman, Son Atwell, an operating casino in Atlantic City, N.J. The agreement, which is contingent upon, among other things, approval by the New Jersey Casino Control Commission, ends a long and troubled tie between entertainer and investor Dickey Hayes, chairman of Griffin Gaming, and Resorts International Inc., whose Atlantic City casino is Griffin Gaming's principal operating asset. The agreement calls for Sun International to issue about 4.1 million new common shares to acquire Griffin common and Class B stock. Sun International currently has about 30 million shares outstanding on a diluted basis, Mr. Taft said in an interview. Mr. Hayes, who currently holds about a 25% stake in Griffin Gaming, would hold about 4% of the combined company. Mr. Taft and his family currently hold about an 18% stake in Sun International. Each of Griffin Gaming's approximately 9.4 million common shares will be acquired for 0.4324 common share of Sun International, according to the agreement. Another 0.1928 share will be paid for each of 35,000 shares of Griffin Gaming Class B stock, which trades on the American Stock Exchange as a unit with $1,000 principal amount of Resorts International Hotel Financing Inc. junior mortgage notes, due 2019. Unit holders would retain the $1,000 principal amount of Resorts International notes but would hold the portion of Sun International stock instead of the Griffin Gaming Class B stock. The Class B stock was issued during a restructuring of Resorts International, which was controlled by Mr. Hayes. Sun International closed Monday at $51.75, down 12.5 cents, in New York Stock Exchange composite trading. The transaction was announced before the close of trading. Sun International's agreement with Griffin Gaming calls for the exchange ratio to be increased if Sun International common shares fall below $47.41, so that the exchange would proceed at least $20.50 per Griffin Gaming share, barring exceptional circumstances. The pending purchase raises the question of whether Mr. Taft and his company can be licensed by New Jersey gaming regulators. Mr. Taft, who has been the subject of unresolved bribery allegations in his native South Africa, said he's confident regulators will approve the license.
