American regional casino operator, Full House Resorts Incorporated, has rejected a proposal from Z Capital Partners that would have seen the private equity management firm pay approximately $132.5 million in order to acquire all of its issued stock.

Unanimous refusal:

In an official Tuesday letter sent to James Zenni, Chief Executive Officer for Z Capital Partners, Full House Resorts Incorporated declared that its board of directors had ‘unanimously determined’ that the planned deal was ‘not in the best interests’ of the Las Vegas-based firm or its shareholders.

Pitch lacking in detail:

Full House Resorts Incorporated operates five casinos in four states including Stockman’s Casino in western Nevada as well as southern Indiana’s Rising Star Casino Resort and its correspondence also stated that the takeover offer from Z Capital Partners had not specified ‘a transaction structure’ or provided ‘evidence of financing.’

Undervaluation concerns:

The target of the takeover used its letter to declare that the offer from Z Capital Partners ‘dramatically undervalues’ its business and did not reflect its ‘strategic value and future prospects.’ Full House Resorts Incorporated’s rebuff explained that the proposal represented a 35% discount when compared with its real worth and ‘reflects a stark and fundamental disconnect’ to its valuation by ‘third-party investors and analysts.’

Read the letter from Full House Resorts Incorporated…

“Our board and management team see significant upside to the company’s current and recent trading prices based on already-completed capital projects across our existing portfolio as well as established or prospective organic growth opportunities in Colorado, Indiana and New Mexico, among other places.”

Possible ‘execution’ hurdles:

New York City-headquartered Z Capital Partners had revealed in its Monday offer that it wanted to combine Full House Resorts Incorporated with its own Affinity Gaming subordinate post-acquisition in order to create an enterprise that was responsible for 16 casinos in six states. But, its target additionally used its letter to explain that any such merger would be subject to ‘significant execution risks’ owing to multiple ‘jurisdictional overlaps’ between the two gaming firms.

Read the correspondence from Full House Resorts Incorporated…

“Our board and management team collectively own approximately 17% of Full House Resorts Incorporated’s shares and our highest priority is creating value for the company’s stockholders. Based on our review, we are fully confident that our strategic plan will deliver value for our stockholders far superior to the value your letter indicates. Accordingly, our board has no interest in pursuing what you propose.”