Itt May Roll Again At Circus' TableBy
Most gambling analysts want investors to focus on the long-term growth prospects of the casino business rather than on the glitter of the current takeover blitz. So in recommending Circus Circus Enterprises (CIR), Jason Ader of Bear Stearns points to the acceleration in earnings expected to begin in the fourth quarter and to the company's "strong balance sheet and premier management team." But guess what: It's the takeover angle that has goosed the stock: From 29 in late July, Circus jumped to 35 7/8 by Sept. 24.
The latest talk about Circus: The top brass at ITT held discussions with Circus about a combination. The talks fell apart, however, in early September when the two sides couldn't agree. Chuck Di Rocco, editor of Gaming Today, says ITT President Robert Bowman confirmed that a deal was close, but wasn't quite right.
Di Rocco also asked Circus Chairman Clyde Turner about the aborted deal. "He didn't have much to say other than confirm that the two gaming companies had talked," says Di Rocco. He adds that other Circus executives opposed a deal with ITT.
A CEO of another Las Vegas outfit says the deal came apart when the shares of ITT started declining--thus raising the price that ITT would have had to pay, since a big part of the deal was based on a stock swap. But he believes the game isn't over. "When ITT gets over the slump it's in"--partly a result of acquisitions such as Caesars World--"it will roll the dice again to buy Circus." He estimates Circus is worth 45 to 50 in a takeover. ITT spokesman Jim Gallagher confirms that talks were held and didn't go anywhere "because we felt it wasn't right for us." But he says ITT "never closes the door" on such talks. Circus declined comment.
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