A New Stunt At Circus Circus?By
A thunderbolt has struck Circus Circus Enterprises (CIR): Shares have tumbled from 36 in February to 23 on July 22. One reason: Analysts have cut their 1997 earnings estimates. A general slowdown in Las Vegas plus a glut of new hotels, analysts say, have kept many rooms empty at Circus Circus.
Enter several hedge-fund managers, including some heavy hitters who asked not to be identified. They've been buying Circus since it hit a low of 21 on July 9--two days after gambling analysts downgraded the stock.
Why are hedge funds snapping up shares? They wouldn't say, but some money managers suspect Hilton Hotels is eyeing Circus Circus for a takeover. Circus has nine hotel-casinos in Nevada, including three on the Las Vegas strip. It also runs riverboat casinos in Tunica, Miss., and Elgin, Ill.
Hilton hasn't officially withdrawn its hostile bid for ITT, which has decided to split into three companies to thwart Hilton's takeover plot. But one investment banker says Hilton plans to switch its attention to Circus, which is worth 30 to 32 in a buyout. "Management wouldn't be unhappy with such an offer," says the banker, who believes Hilton will make its move soon, while Circus stock is in a funk. Chuck Di Rocco, editor of Gaming Today, says management "would sell if a reasonable offer came along." Hilton spokeswoman Kathy Shepard declined comment.
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