In a huge deal, two private equity groups bought out Harrah's, the largest casino company in the world, says an anonymous source. The price is for a reported $16.7 billion, two people close to the negotiations said. The official announcement could come as quickly as Tuesday.
This is great for shareholders in Harrah's (HET) as the deal values the stock at $90 per share, a whopping 36 percent premium over the Harrah share price of Sept. 29, the last trading day before Apollo and Texas Pacific through out the idea of a buyout on Oct. 2. Part of the deal will also include the assumption of $10.7 billion in debt. The original offer by the companies was for $81 a share.
Harrah's operates 39 casinos across the U.S., "including Caesars Palace, Bally's and Paris on the Las Vegas Strip, and Caesars and Harrah's in Atlantic City, N.J." They also operate Casino Windsor in Canada and Conrad Punta del Este in Uruguay. The Vegas and Atlantic City sites account for about 60% of the company's cash flow.
I mentioned this deal before, along with the value the company probably has.
The one thing I don't like about this deal is that the casino industry successfully lobbied the government to legally eliminate their Internet competitors. I think this is what got Harrahs such a high premium for the company. Eliminate your competition and the value of any company would go up. This is dirty business that shouldn't be allowed.
Nonetheless, they got away with it, and now got a much larger offer as a result. This will benefit the whole casino industry for years to come.
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