Thirty-Five Harrah's Casinos Makes for Largest Private Buyout
by Sheri Smith, News Staff Writer
December 18, 2006

A buyout of the world's largest casino operator, Harrah's Entertainment, by two private companies appears to be imminent, pending confirmation from the parties involved in the deal and approval from thirteen state gambling regulators, including the Nevada Gaming Control Board, as well as as twelve other U.S. States where Harrah's casinos are located. Despite no confirmation from Harrah's or the two companies making the offer - Texas Pacific and Apollo Management - reports from the Associated Press, New York Times and Wall Street Journal revealed inside numbers.

The accepted offer reportedly values Harrah's shares at $90 each, culminating in a overall buyout offer of $16.7 billion. Ranked as the largest transition from a public to private company, and the sixth largest private equity buyout ever, news of the deal sent Wall Street scrambling and stock prices up nearly 3.4% to close at $82.18 per share. With over 14 million shares traded on Monday, activity was four times faster than usual.

Apollo and Texas Pacific openly expressed their interest in Harrah's in October of this year. Since that time, the current offer marks a 36% premium increase of Harrah's shares. Partly due to competitive bids from Penn National Gaming, who reportedly placed an offer of $87 per share, a bloated final offer was certainly to be expected in this corporate world of buyouts and high stakes business. Harrah's is also certainly worth every penny, considering their prestigious earnings record. Bringing in $4.7 billion in revenue from its thirty-five casino properties in the first half of 2006, in terms of revenue, Harrah's has the luxury of calling themselves the largest gaming operator in the world.

Trading has leveled out around $82 a share, while final negotiations remain to be finalized. The two sides have apparently been at table negotiations for the last two weeks in New York City, and remained so over the course of this last weekend and Monday. Harrah's Casinos spokesperson, Alberto Lopez said he could not confirm or deny any market speculation.

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