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WSOP Poker Host Harrah's is Undecided on Buyout Offers
Fri, Dec 15th, 2006 @ 12:00am
The special board committee for Harrah's Entertainment Inc. ended their 2 day meeting yesterday with no decision regarding buyout offers it has received, according to a person close to the matter.
The special board committee was comprised of all 11 members of Harrah's board, except chairman and chief executive Gary Loveman. The committee had met in New York City since Wednesday to evaluate offers it had received by their cut off date of close of business Tuesday.
As previously reported, one offer was to take Harrah's private, from the private equity firms Apollo Management Group and Texas Pacific Group. Their initial offer of $81 per share was raised to more than $83.50 per share, or more than $15.5 billion, another person close to the matter said.
A second offer previously reported was from Penn National Gaming Inc., a casino and horse racing track operator based in Wyomissing, Pennsylvania. Sources relayed that Penn's bid was slightly higher than the bid from the Apollo group.
A third option being weighed was a plan to recapitalize Harrah's by borrowing money to give shareholders a large dividend or to repurchase shares to boost shareholder value, the person said.
Both sources asked not to be named because of the sensitivity of the negotiations.
Harrah's has not confirmed any information about the bids since making an announcement Oct. 2 that private equity firms Apollo and Texas Pacific had made an initial offer.
The proposed deal, even at the original bid price, would make it one of the largest leveraged buyouts in history. Officials from Apollo, Texas Pacific and Penn refused to comment.
Harrah's is the world's largest casino company by revenue. It operates 39 casinos including Caesars Palace, Bally's and Paris on the Las Vegas Strip, and Caesars and Harrah's in Atlantic City, N.J. It also has interests in Casino Windsor in Ontario and Conrad Punta del Este in Uruguay.
By the end of the year, as previously reported at PokerPages, Harrah's is to acquire U.K.-based London Clubs International PLC, which operates seven casinos in Britain, two in Egypt and one in South Africa, and is a consultant for a casino in Lebanon.
Harrah's also is pursuing projects in Singapore, the Bahamas, Spain and Slovenia.
Shares of casino operator Harrah's Entertainment Inc fell more than 2 percent on Wednesday when the market speculated that the company would pursue a recapitalization rather than a full buyout.
The stock had closed down 2.1 percent to $78.50 on the NYSE Wednesday. At the time of this writing, the stock had closed at $79.10.
"If they turn down both bids, they will have to come up with a better plan," said Joseph Fath, a portfolio manager at T. Rowe Price Associates, which owns Harrah's stock. "If they don't do anything, there's going to be significant pressure on the stock."
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