Photo courtesy of the Atlantic City Convention & Visitors Authority.
MGM Resorts International is purchasing Boyd Gaming's 50 percent stake in the Borgata Hotel Casino & Spa to seize sole ownership of the Atlantic City attraction, the Associated Press reported.
MGM, which already owned a 50 percent stake in the Borgata, will purchase the remaining stake for $900 million. After deducting Boyd's share of the property's outstanding debt, though, MGM will pay out approximately $600 million for the remaining stake.
MGM will assume and refinance Boyd's share of debt.
Boyd plans to put the proceeds of the deal - which is expected to close in the third quarter of this year - toward reducing its debt and improving its balance sheet.
Opened in 2003, the Borgata has been Atlantic City's top-performing casino over the past decade-plus. The Borgata reported net revenue of $812 million and $212 million in adjusted earnings during the first quarter of 2016.
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Despite Atlantic City's recent struggles, MGM Resorts International CEO Jim Murren expressed confidence in the move.
"We believe Borgata's best days are yet to come," he told the AP. "When you've got a great property that's carefully cared for in a market as large as Atlantic City, you can and should do well."
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While Boyd CEO Keith Smith acknowledged the property's strong performance, he said the company saw the deal as "an attractive opportunity to immediately unlock significant value for our shareholders."
What's Next?
Once the acquisition is complete, MGM expects to sell the Borgata's real estate assets to its recently spun-off real estate investment trust MGM Growth Properties (MGP).
Afterward MGP will lease the property back to a MGM subsidiary that will operate the hotel.
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