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Picking Up The Chips At Station Casinos

BusinessWeek Investor -- Inside Wall Street

Picking Up the Chips at Station Casinos

In Las Vegas, rumors abound regarding who's next in the takeover game. A newcomer on the list: Station Casinos (STN), whose niche is catering to local gamblers through its four large hotel-casinos and two smaller gaming properties in Nevada. Chuck DiRocco, publisher of the Las Vegas newspaper Gaming Today, says his sources are betting that Station Casinos will be bought out. Several gambling companies have talked with Station Casinos bigwigs, he says. The price being mentioned: 20 to 25 a share. The stock is currently at 12 3/4, down from 20 in May. MGM Grand and Park Place Entertainment are mentioned to be among the possible buyers. Park Place declined comment and MGM Grand didn't return calls. Station Casinos says it isn't for sale.

Management is said to be ready to bail out because of the beating the stock has taken as a result of an investigation in Missouri stemming from bonus payments made by Station Casinos to an outside lawyer. Questions have been raised about whether any of the money was used improperly to influence public officials. Station Casinos denies any wrongdoing. Some executives have been subpoenaed to appear before the gaming commission in a public meeting in connection with the case. On July 20, Station agreed to sell its Missouri riverboats.

Buyout or not, some pros view the stock's recent drop as a buying opportunity. Analyst Stuart Linde of Lehman Brothers says the sale of the Missouri assets is a "smart strategic deal." The company can now focus on its Las Vegas business, says Linde, who thinks the problems in Missouri have already been reflected in the share price.By Gene G. MarcialReturn to top

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