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Tuesday, October 3, 2006
Harrah's is offered $15 billion for buyout
LAS VEGAS -- Harrah's Entertainment received a $15.05 billion offer for the company from two private-equity firms in what would be the biggest deal ever for a casino operator and the fifth-largest leveraged buyout in history.
Harrah's said Monday that Apollo Management and Texas Pacific Group are offering $81 per share in cash, a 22 percent premium to Harrah's closing stock price Friday on the New York Stock Exchange.
Harrah's shares surged $9.25, or 13.9 percent, to close at $75.68 Monday on the New York Stock Exchange.
Harrah's said it had not committed to the deal, but it established a special committee of independent directors to review the offer and retained UBS Securities LLC as an adviser.
The company did not respond to calls for comment.
Harrah's operates about 40 casinos throughout the country, including Caesars Palace in Las Vegas, and other casinos under the names Ballys, Horseshoe and Showboat. The Las Vegas-based company beefed up its portfolio with last year's purchase of Caesars Entertainment Inc., giving it an upscale offering on the Las Vegas Strip.
Analyst Rod Petrik of Stifel Nicolaus said Harrah's shares had been relatively cheaper than its peers in the casino business for several reasons, "perhaps none more important than its inability to crack into the growing Asian gaming markets."
Gambling companies' shares also appeared cheaper than shares in other sectors, providing a prime target for private-equity investors, he said in a research note.
Neither New York-based Apollo Management nor Texas Pacific Group commented on the report.
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