Harrah’s agrees to buy Caesars
Harrah’s Entertainment has agreed in principle to buy Caesars Entertainment for more than $5 billion or about $17 a share, according to reports. The deal, which would merge ownership of Stateline hotel-casinos, could have major impacts in the gaming world, according to financial analysts, regulators and Douglas County officials.
The acquisition would create the world’s largest gambling company, dwarfing the pending $4.8 billion MGM-Mandalay casino deal.
Numerous phone calls to Harrah’s and Caesars corporate spokesmen were not returned Wednesday. Harrah’s Lake Tahoe management declined to comment about the deal. Caesars Tahoe management didn’t return phone calls.
The merger will require federal and state regulatory approval.
“They’ll have to present to regulators the market share taken in merging,” said Frank Streshley of the Nevada Gaming Control Board.
Streshley added that the board, which conducted its monthly meeting yesterday in Las Vegas, may consider South Shore, North Shore and Reno as one market in deciding whether or not there is a monopoly.
When Harrah’s bought Harveys Casino Resort in 2001 for $675 million in cash and liabilities, approval from the Federal Trade Commission and Control Board took three months.
The stakes are much larger this time. Collectively, the Las Vegas-based companies generate $8.8 billion in annual revenue. Harrah’s acquisition of Caesars would monopolize the casino corridor, as it owns Harrah’s, Harveys and Bill’s.
Horizon Resort Casino spokeswoman Bonnie Picker said her casino has no comment. Lakeside Inn & Casino President Mike Bradford was unavailable for comment.
“I see them operating it under the Caesars name like they did Harveys,” Douglas County Manager Dan Holler said. If this does happen, it could mean keeping the status quo as far as guests are concerned.
The buzz among financial and gaming analysts Wednesday revolved around whether Harrah’s would change its focus from growth opportunities in a variety of markets to focusing on Caesars operations – mainly on the Strip in Las Vegas.
“My guess is that it will be a stock and debt deal,” said Cheryl Sillings of Brookstreet Securities Corporation in South Lake Tahoe. “No one has really said how they’ll pay for it.”
Sillings said Harrah’s would need to consider balancing another $4.5 billion in debt incurred from Caesars and a credit rating that may be lowered. She believes properties would have to be dumped along the way if the deal goes through.
“My guess is they’ll sell Caesars up here. I think regulators aren’t going to let them operate three big casinos,” she said. “This announcement could throw a monkey wrench into the MGM-Mandalay deal,” she said, adding the timing appears to be a factor. “How could regulators say yes to them and no to Harrah’s?”
Harrah’s stock rose $1 Wednesday to close at $50.98. Its annual low came last July at $38.65. Caesars shares closed at $16 – up 14 percent. Its stock was about half that last September. Both companies are due to release their earnings reports next week.
Harrah’s has 26 casinos in 13 states. Caesars owns 27 properties in five countries. In January, Caesars changed its name from Park Place Entertainment.
– The Associated Press contributed to this report.