Harrah’s makes bid for Players
Harrah’s Entertainment, Inc. will add several new notches to its acquisition belt if its proposed purchase of Players International, Inc. is approved.
The gaming companies announced Monday that Players had accepted Harrah’s $425 million purchase offer. That includes a cash payment to shareholders of $8.50 per share and assumption of $150 million in debt.
A definitive agreement is expected by the end of the week.
Should the merger be approved by shareholders and regulators, expected by the end of the year, it will be Harrah’s third acquisition in recent years. Since purchasing Showboat and Rio gaming companies, Harrah’s has become one of the major players in the industry with a nationwide presence.
“We said a couple years ago that we planned to be one of the leading consolidators in the industry,” said corporate spokeswoman Pat Martin from Harrah’s headquarters in Memphis, Tenn.
Jackpots’ Midwest holdings will strengthen Harrah’s presence in several of those markets, including southern Illinois and northern Kentucky, central Tennessee.
“It’s a great opportunity for us because it puts our name in a couple markets we don’t already have a presence in,” Martin said.
Players operates a riverboat casino on the Ohio River in Metropolis, Illinois; two riverboats at Lake Charles, Louisiana, two dockside riverboat casinos in Maryland Heights, Missouri plus a horse racetrack in Paducah, Kentucky.
Using its Total Gold customer loyalty program that encourages players to stick with Harrah’s wherever they go, the company also expects to pick up Houston gamblers for Harrah’s casinos.
“We are excited about the opportunities to leverage Players’ Lake Charles operation to create direct access to customers in the Houston market,” said Phil Satre, Harrah’s chairman and chief operating officer. ”Until now we have had to access these customers only indirectly.”
Players and Harrah’s also jointly operate a land-based hotel and entertainment complex in Maryland Heights, Missouri.
Instead of being in competition with partners in the complex, Martin said, “this will make it one happy family.”
Harrah’s intends to convert each of the Players casinos to either Harrah’s or Showboat brand names depending on which brand is likely to make the biggest impact in the individual markets.
Harrah’s currently operates 18 casinos in the United States under the Harrah’s, Showboat and Rio brand names. Harrah’s New Orleans is scheduled to open in October. A sale of Harrah’s interest in the Star City Casino in Sydney, Australia is expected to close by year-end.
Stock prices for both companies rose Monday in midday trading. Harrah’s was up 75 cents, or 3.5 percent, at $22.25, while Players was up $1.34 3/8, or 20.5 percent, at $7.90 5/8.
”It’s just another feather in Harrah’s cap,” said analyst John J. Rohs at Schroder & Co. Inc. ”It’s a very good move for the company. Obviously, it’s not a done deal yet, but strategically it makes a lot of sense for them.”
He predicted it would boost Harrah’s earnings by 5 cents a share.
As a result of the Harrah’s offer, Players terminated its existing merger agreement with Jackpot Enterprises, Inc. The previous suitor offered in February to buy the company for $8.25 per share, part cash and part stocks, without assuming the Players’ debt. The Jackpot offer was also contingent on financing, which Harrah’s offer is not.
A Jackpot spokesman said on Monday that no decision had been made whether or not to make a counter offer.
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