Shareholders approve Harveys deal
Amid speculation by some analysts that Harveys Casino Resorts is worth more than the $28 per share offered by Colony Capital, the company’s shareholders on Thursday approved the offer endorsed by their board of directors.
Shareholders representing only 2 percent of the more than 10 million outstanding shares voted against the merger, according to corporate officials.
During the meeting conducted at Stateline where founder Harvey Gross opened Harveys Wagon Wheel in 1944, Chief Executive Officer Chuck Sharer thanked the 151 shareholders present for their continued support for the board of directors.
“Today’s approval of the merger agreement is evidence of that support,” said Scharer, who is expected to continue to guide Harveys under the Colony Capital banner.
With approval from gaming authorities in Nevada, Colorado and Iowa, the $420 million merger could be finalized by the end of the year. At that time, Harveys would become a privately held company and affiliate of Colony Capital.
“Harveys has a great future,” said director William Ledbetter, son-in-law of the founder. “Colony is not a management group, it’s an investment group. They liked the way Harveys was being run.”
According to Colony Capital representatives, Harveys’ management team as well as its assets were part of the attraction.
Because of that interest, the bulk of Harveys’ management team is expected to continue with the company, although the descendants of Harvey Gross will move on to other ventures.
“The transaction should be seamless for the employees, the management team and the community,” Scharer said.
After the merger was announced Feb. 3, several analysts, particularly Bruce Turner with Salomon Smith Barney of Tampa, Fla., said that Colony’s offer of $28 per share undervalued the company. Those analysts expected better offers, as much as $41.
To questions stemming from those reports, Scharer told shareholders that Colony’s offer was “at the highest end of the range given to us by” analysts Donaldson Lufkin & Jenrette Securities Corp.
“We overturned just about every stone to look for the best price for the shareholders. Nobody knocked on the door.”
The fact that Colony Capital offered a cash buyout made it a stronger offer. Because of the volatility of the stock market, other types of offers could decline in value by the conclusion of the merger, Scharer explained.
Harveys Casino Resorts owns and operates Harveys Resort Hotel Casino at Lake Tahoe, Harveys Wagon Wheel Hotel/Casino in Central City, Colo., and Harveys Casino Hotel in Council Bluffs, Iowa.
Colony Capital, founded in 1991, is a private, international real estate investment firm headquartered in Los Angeles. In recent years, the company has benefited from troubles in Asian markets and bought, at huge discounts, a number of exclusive hotels in exotic locations.
A merger with Harveys would be Colony’s first venture into gaming.
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