Station Casinos, said it received a management-led buyout offer from a group led by its chairman and CEO Frank Fertitta, valuing the company at $82 per share, or $5.15 billion.
CNBC's David Faber says the offer appears quite rich at first blush, approximately 13 times enterprise value over EBITDA. "However when you read some research notes, the company does expect to have a number of Native American casinos coming on-line over the course of the next year that some analysts say could be worth as much as $20 a share."
The offer marks the third buyout offer received by a major casino company this year, as executives move to operate their businesses out of the public market amid a flood of private equity financing.
Fertitta's investor group is called Fertitta Colony Partners, formed by Fertitta and his brother Lorenzo who is president of Station. The group also includes Los Angeles-based real estate investment firm Colony Capital.
The offer represents a 19% premium over Station's closing price on Friday of $69.10 on the New York Stock Exchange.
The company, which operates casinos catering to Las Vegas residents, said it established a special committee of independent directors to review the bid as well as any alternative proposals.
Faber says there may not be a challenge to Fertitta's offer. "We will see what the special committee decides to do here. I have spoken with at least one person who tells me they were at least aware of one potential private equity buyer here that had done some work and ultimately decided to pass. So it is not clear that there are going to be any competitors here," Faber reported.
Fertitta Colony Partners has received sufficient financing commitments to complete the deal, the company said. Frank and Lorenzo Fertitta, Blake and Delise Sartini, and Colony have provided equity funding commitments.
Delise Sartini is the sister of Frank Fertitta and Blake Sartini -- former chief operating officer at Station Casinos -- is Fertitta's brother-in-law.
Deutsche Bank Trust Company Americas and German American Capital have provided debt financing commitments.
The special committee received the proposal on December 2 and had not reached a decision yet, it said in a statement.
Though Fertitta does not say why he launched the offer, many executives are preferring to take their companies private because they are tired of Wall Street pressure and financing is abundant thanks to the growth of private equity.
Several management-led buyout offers have been announced this year across several industries, spurred by cash-rich private equity firms joining in to invest on the deals.
Such deals have also raised concern among analysts and investors as it could create a conflict of interest because it puts management in a position of both evaluating the best bid, and being a bidder itself.
While management typically recuses itself from committees formed to mull the offers, critics say their presence in the bid still presents the potential for conflict of interest.
In October, Harrah'sEntertainment, the world's biggest casino operator, said it had received a $15 billion buyout offer from private equity firms Apollo Management and Texas Pacific Group.
Resort and casino operator Kerzner International said in March that an investor group led by its chairman and chief executive would pay about $3 billion to take the company private.