Previously, we discussed how comments made by Ameristar Casinos (Nasdaq: ASCA) and CEO John Boushy during the fourth-quarter earnings call suggest that an acquisition may be imminent. We also noted how the prospective acquisition targets would help fill out Ameristar's regional network. On Wednesday, we'll take a look at what I believe to be the primary targets, and we'll also discuss how Ameristar property would compete in those markets.
But before we get into the properties, I think it would help to go over a few key ideas as they relate to Ameristar's acquisition strategy:
1. Location. While Ameristar is primarily interested in purchasing existing casino properties that generate EBITDA, the company isn't actually out to buy casinos. More than anything else, Ameristar is looking to buy a location. As long as the location fits the strategy, the worse shape the casino is in, the better, since the company's probably going to build over it anyway.
2. Killer concepts. In terms of non-gaming amenities and dining options, Ameristar has several killer concepts, including the Amerisports sports bar and Bottleneck Blues Bar. You'd think a sports bar would be a natural thing for a casino to have, but you'd be surprised at how many don't -- and of those that do in the riverboat states, I have yet to see one that even remotely compares to Amerisports (for views, click here, here, and here).
The Bottleneck Blues Bar is Ameristar's answer to Harrah's (NYSE: HET) VooDoo Lounge, and a concept that I think works particularly well at Ameristar's St. Louis and Vicksburg properties, as well any future Tunica property.
3. The casino. Ameristar aims to have the most spacious casino with the most advanced gaming floor -- and the most penny-denomination slots -- in every market in which it competes. Combining low-denomination slots with a high-quality environment yields an attractive value proposition for gambling patrons.
4. The Star Club. The Star Club is Ameristar's VIP lounge, and Ameristar's alternative to Harrah's Diamond Lounge. This is a competitive advantage over the second-tier casino operators, against which Ameristar competes for high-end play. (Many riverboat casinos don't even have VIP facilities.) I believe that the Star Club will offer a significant advantage when the company expands its regional network and links its player club system to promote cross-market play. In the St. Louis market, Ameristar's Star Club is vastly superior to Harrah's Diamond Lounge, but Harrah's St. Louis Diamond Lounge is several grades lower than its much higher-quality -- and newer -- Diamond Lounge facilities in other markets, including the Horseshoe Tunica and Caesars Palace Las Vegas.
With that out of the way, we'll examine some of the potential acquisition targets on Monday.
Ameristar is a
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Fool contributor Jeff Hwang owns shares of Ameristar Casinos. The Fool has a disclosure policy.
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