Failing in an attempt to acquireAztar Corp (NYSE:AZR) and its Las Vegas and Atlantic City properties this past spring, casino operator Pinnacle Entertainment (NYSE:PNK) has remained aggressive in expanding its national footprint with another shot at the Atlantic City market. This time, Pinnacle has agreed to purchase Carl Icahn's Sands Casino Hotel and the adjacent Traymore site -- totaling 18 acres of land along the Atlantic City Boardwalk -- for a total of $270 million.
The deal calls for the closure of the 26-year-old Sands Casino within 70 days of the signing of the agreement, which will allow Pinnacle to knock down and allow construction of a "new, much larger facility as quickly as possible."
The new facility will be part of an ongoing transformation in Atlantic City. With new locals competition in the form of racinos in New York and Pennsylvania, casino operators in Atlantic City are investing heavily to offer a more complete destination resort experience in the vein of the Las Vegas Strip. MGM Mirage (NYSE:MGM) and Boyd Gaming's (NYSE:BYD) jointly owned Borgata is the first example of this. Recent expansion projects at Aztar's Tropicana, the Borgata, and properties owned by Harrah's (NYSE:HET) further this. And Harrah's is soon expected to reveal large-scale redevelopment plans for the Boardwalk properties acquired in last year's merger with Caesars Entertainment.
At $15 million per acre, Pinnacle's purchase price is also nearly Las Vegas Strip-like. But since acquisition beats regional rivals Ameristar Casinos (NASDAQ:ASCA) and Penn National (NASDAQ:PENN) to the Atlantic City market, it helps put Pinnacle on a national stage, making the price tag less outrageous.
Also, Pinnacle is in the running to acquire one of two slot parlor licenses in nearby Philadelphia. The Atlantic City resort property would enhance the value of the Philadelphia property (and vice versa) by being a logical place to scoot Pinnacle's Philadelphia gaming customers.
In all, this is a big step for one of the premier emerging casino operators.
For related coverage, check out:
- Pinnacle Gambles on Aztar
- Gauging Aztar's Value
- The Casinos of Southern Indiana: Part I, Part II, and Part III
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Fool contributor Jeff Hwang owns shares of Ameristar Casinos. The Fool has a disclosure policy.
