Takeover price for The Sands sweeter than original bid

The $15-a-share takeover offer that shareholders of The Sands Regency voted on last week provides them with at least $1.50 more per share than they would have gotten in the first offer received by the company.

In proxy materials filed with the Securities and Exchange Commission, executives of Reno-based The Sands Regency said executives of Herbst Gaming Inc. first floated a takeover price of $13 to $13.50 a share.

The offer came in late January, about a week after an unidentified member of the board of The Sands Regency got a phone call from a Herbst executive expressing interest in the acquisition.

Initially, Sands executives said in their proxy materials, they weren't interested in selling.

But as they thought about things some more and as Sands directors Larry Tuntland, Douglas Hayes and David Grundy got more details from Herbst The Sands directors got more interested.

The directors decided that the company, which operates Rail City in Sparks and Gold Ranch at Verdi along with its downtown Reno property and a couple of small casinos in Dayton, wasn't big enough to compete on its own as a wave of consolidation sweeps the casino industry.

At the same time, the board decided that it couldn't find attractive acquisitions to allow The Sands to grow.

Those two alternatives shut off, the company decided to sell to Las Vegas-based Herbst Gaming.

At the same time, the companies were talking about price. An offer of $13.75 a share from Herbst on April 7 was shot down three days later. A sweetened offer of $14.25 on April 18 was shot down on April 20. Finally, on April 24, Herbst came in with the $15-a-share offer that the Sands board recommended to its shareholders.

But even at that, the two sides still disagreed about the amount that the Sands would pay if the deal blew up. Herbst wanted $7.5 million, but later agreed to $5 million. And that figure was cut further to $4 million as the Sands settled a lawsuit with shareholders unhappy about the terms of the deal.