Harrah’s deal complete
The purchase of Showboat, Inc. by Harrah’s Entertainment, Inc. cleared its last hurdle on Monday to make Harrah’s the largest gaming-only company in the world in terms of gaming revenue and number of properties.
With the approval late last week by Australian gaming officials, Harrah’s purchased Showboat for $30.75 per share, or $519 million in an all-cash transaction. Harrah’s also agreed to assume approximately $635 million in Showboat debt in the deal that was announced Dec. 19, 1997.
“Since we announced our acquisition of Showboat, the consolidation of the industry has picked up pace,” said Philip G. Satre, chairman and chief executive officer of Harrah’s. “We believe Harrah’s is well positioned to participate in this consolidation. We continue to evaluate additional opportunities that make sense from a strategic and financial perspective.”
The trend toward gaming mergers has impacted three of Stateline’s casinos this year.
On February 2, Starwood Hotels & Resorts purchased ITT Corp.’s holdings, including Caesars Tahoe, in a $14.6 billion takeover of mostly hotel properties.
Shareholders for Harveys Casino Resorts on May 14 approved the $420 million sale of the company to Colony Capital, a real estate investment firm. That purchase is expected to be finalized by the end of the year.
With the close of the Harrah’s/Showboat merger, Harrah’s has 19 fully owned and one partly owned casino. Added to its 16 properties nationwide are Showboat casinos in Las Vegas, Atlantic City, The Showboat Mardi Gras Casino in East Chicago, Ind., plus majority shares in the Star City casino in Sydney, Australia.
Harrah’s officials are evaluating what to do with the Las Vegas property. Located away from the Las Vegas Strip and catering to local clientele, that Showboat is not considered a good fit with Harrah’s target customer: the avid gamer who plays at casinos in multiple markets.
“We’re exploring several options including selling the property,” said Harrah’s spokesman Ralph Berry. “We know it will not be branded as Harrah’s.
“Australia is also not a strategic asset but it’s different in that it would be an asset, an added value for our shareholders.”
The merger, expected to produce savings by consolidation of duplicate corporate departments, is not expected to impact front-line Harrah’s employees, Berry said.
Because such offices as payroll and risk management are centralized at Harrah’s but each Showboat property has separate departments, elimination of duplicate offices could impact some people in the top echelons of the corporation.
Showboat’s president and chief executive officer, J. Kell Houssels, III, will join Harrah’s as the president of Harrah’s Showboat division and member of the board of directors. Other Showboat executives will also be incorporated into Harrah’s as division executives.
Customers of Harrah’s and Showboat will benefit with more casinos where they can use customer loyalty points.
Harrah’s officials will begin immediately to bring Showboat properties into its Total Gold program. Customers using the Total Gold card acquire points and benefits that can be used at any Harrah’s – and now Showboat – properties.
“Our strategy – as defined by this very positive transaction – is to use distribution, technology, customer service, marketing and technology to become the casino company of choice for our target players,” Satre said. “Showboat is a perfect fit, offering us additional distribution and an expanded customer base in key growth and feeder markets.”
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