Harrah’s Entertainment Accepts Buyout Offer

Less than one week after private equity groups Apollo Management and Texas Pacific Group were rumored to be increasing their bid for casino giant, Harrah’s Entertainment, they did. Not to the $87 per share as originally thought, but for $90 per share, a 35 percent premium to Harrah’s share price when the first offer was made in September. The stock is now trading above $82.

The $17.1 billion deal ranks amongst the top ten largest private equity buyouts in 2006.

Harrah’s accepted the offer on Tuesday, but despite the high offer, and despite two months of drawn out discussions, Harrah’s still says that it will accept competing offers for another three weeks.

"It's a fair price for Harrah's shareholders. The 25 days allows them to say this is what we came up with on our own, now we are opening it up to others," said Robert LaFleur at Susquehanna Financial Group.

Why would Harrah’s go private? Two big reasons. One, the company doesn’t need money from the public markets anymore, as cashflow is strong, so not having to deal with pressures from stockholders will be great. Two, the executives are going to make A LOT of money off of this.

The deal is expected to be completed within a year. The private equity firms are so confident in this that if it goes past March 1, 2008, they will pay shareholders’ interest expenses.

Harrah’s is also finishing up an acquisition of London Clubs International Plc, a British casino developer.


Originally published December 20, 2006