Casino owner and operator Pinnacle Entertainment Group has agreed to purchase, close and redevelop The Sands, one of the oldest gaming resorts in Atlantic City, N.J.

In a deal announced Sept. 5, Las Vegas, Nev.-based Pinnacle (NYSE: PNK) intends to acquire approximately 18 acres, including The Sands and adjacent land known as the Traymore site. The acreage includes extensive frontage along the Boardwalk, Pacific Avenue and Brighton Park.

The seller is Atlantic Coast Entertainment Holdings Inc. (ACE Hi), affiliated with financier Carl Icahn. The company plans to sell the entities that own the properties for approximately $250 million, plus an additional $20 million for certain tax-related benefits and other real estate.

As part of the agreement, Pinnacle required that the seller close the existing hotel-casino. The closing is expected in approximately 70 days, following a federally-required notice period for employees. The agreement provides for severance benefits in accordance with union agreements, as well as severance pay for nonunion employees who stay through the 60-day closing period.

With 620 guest rooms and an 85,126 sq. ft. casino, The Sands is one of the smallest gaming resorts in Atlantic City. Pinnacle will replace the existing property with a new and much larger facility.

“This major new resort will be a key component in our plan to build a national network of gaming properties,” says Daniel R. Lee, Pinnacle's chairman and CEO. “It will also help extend our development pipeline and our company's growth through 2010 and beyond.”

The seller reviewed several potential projects for the property before deciding to sell the property for redevelopment. “It became patently clear that a shutdown of The
Sands was necessary and inevitable to make room for a great new casino,” Icahn says. “We also concluded that this was the most propitious time to undertake this shutdown, given the robust employment environment in Atlantic City.”