Casino operator Trump Entertainment Resorts Inc. said on Monday it did not reach a deal with potential acquirers and has ended discussions to sell itself, sending its shares down 18 percent.
Trump Entertainment, which runs three casinos in Atlantic City, New Jersey, in May said it received interest from potential bidders. It said on Monday the indications of interest were not likely to lead to a deal that was in the best interests of the company and its shareholders.
Donald Trump's casino company, which emerged from bankruptcy about two years ago and hired Merrill Lynch in March to help it consider its options, said it will continue to review other strategic alternatives.
Cost cutting is already under way.
Trump Entertainment laid off Paul Keller, executive vice president of design and construction, and Chief Information Officer Virginia McDowell to reduce expenses. It doesn't plan to fill those positions, the company said on Monday in a filing with the U.S. Securities and Exchange Commission.
Failure by Trump Entertainment to reach a deal comes amid a generally buoyant market for casino assets.
Last month, a group led by U.S. hedge and private equity firm Fortress Investment Group LLC agreed to pay $6.1 billion for casino and racetrack operator Penn National Gaming Inc.
Harrah's Entertainment Inc., the world's largest casino operator, is in the process of being acquired by private equity firms for $17 billion, while Las Vegas operator Station Casinos Inc. is in the midst of a $5.4 billion management-led buyout.
Atlantic City, which has been struggling to transform itself into a Las Vegas-style entertainment destination, faces challenges from new gaming venues in nearby Pennsylvania as well as from a partial smoking ban.
Trump Entertainment is in the midst of investing about $250 million at its three casinos to update gaming floors and add new restaurants. In addition, the company has recently launched a customer card and is building a 786-room hotel tower at the Trump Taj Mahal.
The aim of the projects, which were kicked off in December 2005, is to boost market share and attract higher-end clientele.
But the projects didn't help the company reverse losses in the first quarter. Trump Entertainment posted a net loss of $8.7 million, or 26 cents a share, compared with $9.7 million, or 32 cents a share, in the first quarter a year ago.
The casino company's shares, which had been lifted by the buyout prospects, fell $2.27 to $10.31 in midday trading on Nasdaq.