Harrah's Ponders $15.1 Billion Buyout

Harrah's confirmed Monday they received a buyout bid for US$15.1 Billion Dollars from an investment group. The group consists of two private investment companies, Apollo Management and Texas Pacific Group. They offered to purchase all of Harrah's stock for US $81 a share.

At $81 a share, the bid is a 22% premium over last Friday’s closing price. As a result, Harrah's stock jumped 14%, to just under $76 a share Monday.

Since Harrah's owns the World Series of Poker (WSOP), many poker players may wonder how this bid and the unexpected passage of the Internet gaming ban by the US Congress last Friday will affect the WSOP.

If the WSOP cannot take U.S players who qualify for seats at online poker rooms, then the number of WSOP attendees will likely dramatically drop. Though the core casino business is the main appeal to equity firms for the buyout, the WSOP is a high profile part of the Harrah's family.

If this buyout proceeds, it would be the fourth largest in U.S. stock market history.

The Las Vegas- based company issued a statement saying there was "no assurance that Harrah's will enter into this or any other transaction." It acknowledged that its board of directors had assembled a committee to review the proposal and had hired UBS Securities as a financial advisor.

"It's probable that the deal will get done, and that it will get done at a higher price," said David Brown, analyst for Minneapolis-based Sit Investment Associates, which owns about 200,000 shares of Harrah's stock. "By being private, Harrah's can reinvest in their business without having to worry about what Wall Street is thinking all the time."

The Harrah's buyout bid is the largest play into the casino industry by private equity players.

The casino industry appealed to private equity firms earlier, since revenues have been growing and growing consistently over the past few years.

But previously, private equity players had been reluctant to enter the casino industry because of the complexity involved in acquiring and keeping gaming licenses. But now with so many investors unhappy with current returns on stocks and bonds, the casino industry is looking better.

Harrah's many holdings in casinos and hotels are scattered throughout the U.S., including California and Louisiana, as well as internationally. Nearly 75% of the company revenues come from gambling, from such casino chains as Bally's, Caesar's and its namesake chain, Harrah's.

To date, the company has missed chances to enter the lucrative Asian gambling market. First was five years ago, when it lost a bid for a license in lucrative Macao. Next was in May, when the Las Vegas Sands Corp. beat Harrah's in a licensing contest to build Singapore's first casino.

Harrah's reported a 22% rise in second-quarter net income to $128.6 million as revenue surged 67% to $2.37 billion after the acquisition of Caesars. The company had $10.7 billion in long-term debt as of June 30.

New York-based Apollo Management has holdings that include Borden Chemical and AMC Entertainment. Texas Pacific Group of Fort Worth has holdings that include Burger King, J. Crew Group, Continental Airlines and Metro Goldwyn Mayer.

More Poker News Articles

Keikoan Captures Harvey's Lake Tahoe WSOPC Championship
12am Thu Nov 19th, 2009

This week marked the finale of the biggest annual tournament series in Northern Nevada, the WSOP Circuit championship at Harvey's Lake Tahoe. While the Main Event saw only a modest turnout, it did boast of a tough final table, and a WSOP bracelet owner as the eventual champion.

WSOP Main Event Champ Joe Cada to Appear on Letterman
12am Wed Nov 18th, 2009

The poker world will receive some late night attention tonight as "The Kid" Joe Cada, the youngest champion in the four decade history of the World Series of Poker Main Event, takes a seat next to embattled talk show host David Letterman.

First Korean Champ of Asia Pacific Poker Tour Crowned in Cebu
12am Tue Nov 17th, 2009

Another stop on the Asia Pacific Poker Tour is in the books, this time it's the APPT Cebu in the Philippines, and for the very first time a Korean player has come out on top.

Pollack Done as Commish of World Series of Poker
12am Sat Nov 14th, 2009

Just three days after crowning Joe Cada as the 2009 Main Event champion, officially closing the special 40th anniversary run of the World Series of Poker, Jeffrey Pollack has resigned his post as Commissioner of the WSOP.

Durrrr Signs as Team Full Tilt's Youngest Member
12am Wed Nov 11th, 2009

Tom "durrrr" Dwan is the newest member of Team Full Tilt, the online site's highest level of affiliation. At 23, Dwan is the youngest of the now 14-person team. The high stakes cash phenomenon was nominated for induction this year into the Poker Hall of Fame until the Hall of Fame Governing Council decided he was too young to meet the "has stood the test of time" qualification.

Joe Cada Becomes Youngest World Series of Poker Main Event Champ
12am Tue Nov 10th, 2009

History was made early Tuesday morning in Las Vegas as 21-year-old Joe Cada outlasted Darvin Moon in heads-up play to claim the 2009 World Series of Poker Main Event bracelet and more than $8.5 million.

Moon and Cada Heads-Up, Ivey 7th at WSOP Main Event Final Table
12am Sun Nov 8th, 2009

After a marathon session at the most esteemed table in the poker world, a 21-year-old and a logger are set to go one-on-one for the World Series of Poker Main Event bracelet.

PokerStars Launches New UK and Ireland Poker Tour
12am Wed Nov 4th, 2009

PokerStars.com has announced the start of a new poker tour with stops throughout the United Kingdom and Ireland. The UK and Ireland Poker Tour (UKIPT) will kick off in Galway, Ireland in mid-December, and the first event in the UK will be held in Manchester in February.

Peerless Media Agrees to Purchase World Poker Tour Enterprises
12am Mon Nov 2nd, 2009

According to a Monday press release, WPT Enterprises Inc., mothership of the World Poker Tour, is now the rightful property of Peerless Media, Ltd., subsidiary of online giant PartyGaming.

Tiffany Michelle and Maria Ho Hit the Amazing Race Rail
12am Mon Nov 2nd, 2009

After surviving six legs of the Amazing Race by the skin of their teeth, poker pros Tiffany Michelle and Maria Ho were finally eliminated in the CBS reality show's most recently aired episode. Michelle and Ho, the last women standing in the 2008 and 2007 World Series of Poker Main Events, gave reality television fans another chance to watch poker personalities compete away from the felt. Annie Duke garnered quite a following earlier in the year on another reality show competition, NBC's Celebrity Apprentice.