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Articles: 9.4B deal combines

Posted by admin on Friday, July 16, 2004 - 01:54 AM

In a deal that would create the world's largest casino operator, Harrah's said yesterday it's buying Caesars for roughly $9.4 billion.
Harrah's said it's seeking a greater presence in key markets like the Las Vegas Strip, and increased access to the high-roller customers who tend to frequent Caesars' casinos. "Caesars provides us access to new markets and new customers," said Harrah's CEO Gary Loveman. The two companies operate a combined 56 casinos, including six in Las Vegas and five in Atlantic City, plus 41,650 hotel rooms. The company raked in $8.3 billion in revenue last year. Yesterday's announcement comes just weeks after MGM Mirage announced its planned $7.9-billion merger with Mandalay Resort Group. The two deals will set up a head-to-head battle between two casino giants. Both deals must still win approval from regulators. If they're approved without changes, the two new mega-gambling companies would account for a quarter of yearly casino winnings nationwide, said Standard & Poor's analyst Thomas Graves. Regulators are expected to order Harrah's-Caesars to sell one of its casinos in Indiana, because that state says no one company can own more than two. The combined company may also have to sell assets in Mississippi and Atlantic City. The Harrah's-Caesars merger was unanimously approved by the boards of both companies. In the deal, Harrah's agreed to fork over $1.8 billion in cash and 66.3 million of its own shares. Those shares would be valued at about $3.2 billion based on yesterday's closing price. Both Harrah's and Caesars stock fell yesterday amid fears the combined company will have to sell assets and skepticism about the strategic merits of the deal. Harrah's shares plunged $3.07 to $47.91, while Caesars shed 95 cents to $15.05. Harrah's chief financial officer Chuck Atwood said the company hopes to seal the deal within a year.

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