BILOXI, MS (WLOX) - Boyd Gaming Corporation of Las Vegas has struck a deal to buy IP Casino Resort in Biloxi. The sale price for the property is $278 million.
Boyd executives call the purchase an "attractive acquisition" that will enable them to expand their business.
Boyd has been looking for a casino on the Mississippi Gulf Coast and company President Keith Smith says IP is a "good fit."
During a teleconference to discuss the pending deal, Smith praised IP's current employees and predicted Boyd Gaming will bring even more efficiency and success to the Biloxi resort.
The announcement came as a surprise to many. Boyd's president says Mississippi offers a competitive tax rate and stable regulatory environment.
"The acquisition of IP will be accretive to earnings and will generate healthy, free cash flow for us. The property also comes with 13 acres of developable land that could be used for long term expansion opportunities," said Boyd President and CEO Keith Smith.
In the short term, Boyd expects to enjoy slow growth.
Although one investment analyst voiced concern about Boyd investing so much in what he described as a "no growth market," Boyd's president and CEO thinks otherwise.
"I think the market in the first quarter grew in the two percent range and we see it continuing to grow slowly as the economy continues to grow. It's performing a little better than some of the east and west coast markets, so we see it continuing to grow," Smith asserted.
Casino analysts we spoke with see positive results in Boyd's purchase of IP. Rich Westfall was a gaming industry executive for nearly 20 years.
"I'm very hopeful that it sends a signal to Wall Street or to the market that tells them that Biloxi and the Mississippi Gulf Coast is open and ready for some serious economic development," said Rich Westfall.
Boyd plans on spending around $44 million in capital improvements over the first year.
Customers should notice a difference with an increased level of comfort and better air quality. That's because most of that money is going to upgrade the air conditioning system.
"Employees of the IP are doing a great job delivering customer service to their guests currently. They're an essential part of the IP experience," said CEO Smith, "And we look forward to welcoming the IP employees to our company."
Boyd's president says he expects they will realize five million dollars in extra savings the first year alone, primarily because a large company like Boyd can improve efficiency with its purchasing power.
Along with the $278 million purchase price, Boyd also agreed to contribute $10 million to the Englestadt Family Fund, money that will be distributed to area charities over the next five years.