With all those concerned declining to comment, the deadline for bids for Harrah’s Entertainment is today and its Board is expected to meet to consider the offers tomorrow. Private equity firms Apollo Management and Texas Pacific Group made a takeover offer of US$81 per share in October but have since raised the bid to US$83.5. A group led by Penn National Gaming is also known to be interested in making an offer for the giant casino company. The original bid by Apollo and Texas Pacific is likely to be raised again to above US$85.5, valuing Harrah’s at around US$16 billion.

As the Las Vegas Sun points out, being a public company is often more trouble than it is worth and going private can bring distinct advantages. Short-term performance goals can be exchanged for long-term development plans, and can save millions of dollars of financial reporting costs demanded of public companies in the process. The present global financial scene means that private equity funds have plenty of money – the top ten are estimated to have US$100 billion of equity at their disposal – and they are seeking better returns than the traditional pension and mutual funds.

When the Harrah’s Board meets to consider the bids it may decide that none is sufficiently attractive and choose a leveraged recapitalisation. Another casino company, Station Casinos, has also recently received a buyout offer. The group of investors includes management and Colony Capital, valuing the company at US$4.7 billion. Many analysts are saying that this will not be the last deal attempting to take casino companies private. Boyd Gaming has already been named as a likely target. (E-12.12.06)

© Copyright 2006 CasinoCompendium



>>> return to archives
>>> return to frontpage