The anticipated announcement has been made – Harrah’s Entertainment has agreed to be acquired by the private equity firms Apollo Management and Texas Pacific Group (TPG). The all-cash transaction is valued at around US$27.8 billion, including US$10.7 billion of debt. The definitive agreement with affiliates of the two equity firms was announced yesterday following the recommendation of a Special Committee of non-management directors to the Harrah’s Board of Directors.
Under the terms of the agreement, Harrah’s stock holders will receive US$90 in cash for each outstanding Harrah’s share, representing a premium of approximately 36% over the closing share price on 29 September, 2006. Gary Loveman, Chairman and CEO of Harrah’s said, "In Apollo and TPG, we will have owners who share our vision for Harrah's, are fully supportive of our current strategy and are committed to helping us execute on it. This will be a change in ownership, not a change in direction." He added that the management team and employees looked forward to working with the new owners into a new phase of growth and development.
David Bonderman, TPG founding partner, said, "We are delighted to be joining with the excellent management team at Harrah's and our private equity partners to continue to build on the Company's strong foundation. Taking a long-term perspective, we believe we will be able to help Harrah's deliver on its growth strategy."
Leon Black, founding partner of Apollo, said, "Harrah's has an excellent brand name, strong cash flows, an impressive portfolio of properties, a very talented management team, and highly skilled employees. Together with our private equity partners, we look forward to building on Harrah's successful track record of operational success and helping the Company to achieve its strategic goals."
Under the terms of the agreement Harrah’s will solicit superior proposals within the next 25 days. If the agreement is concluded then the sale of Harrah’s to Apollo and TPG is expected to be concluded in about one year, subject to the usual conditions and approvals. Harrah’s owns and operates casinos on four continents and will soon finalise its acquisition of London Clubs International. The company also has ongoing projects in Slovenia and Spain. (E-12.20.06)
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