Harrah’s Entertainment has made an offer to buy Caesars
for a total of $9.4 billion in cash, stock and assumption of
debt.
The deal values Caesars at $16.96 per share, a premium of about
6 percent based on Wednesday's close. The transaction is expected
to close in about a year and Harrah's plans to maintain its
investment-grade rating afterward.
The combined entity would have 56 casinos and annual revenue
in the $9 billion range. That makes it even bigger than the
$7.9 billion merger of MGM Mirage that was announced last month.
"Harrah's has achieved noteworthy success by developing
and implementing capabilities across our network of properties
that increase customer loyalty and improve operating efficiency,"
Harrah's Chief Executive Gary Loveman said in a press release.
He continued: "We believe we can enhance Caesars' performance
by deploying our capabilities into its operations. We estimate
we can realize approximately $80 million of synergies in the
first full year of the acquisition, with significantly more
expected over time."
The companies have different styles and operating strategies.
A more centralized Caesars relies on its Las Vegas mega-resorts
and a big presence in Atlantic City while geographically diverse
Harrah's is stronger in regional markets and with "frequent
gamblers."
The deal likely will receive close scrutiny from federal, state
and local regulators, any of which could delay or derail it.
An analysis by the Gaming Industry Observer pointed out a merged
company would control more than half the gambling revenue and
gross profits of Atlantic City's casinos - and nearly as high
a percentage of the resort's hotel rooms and slot machines.
The acquisition would undergo rigorous scrutiny by New Jersey
regulators, the trade publication said.
"The combined company would own and operate five of the
city's dozen casino hotels and control roughly half of the market
by most key measures," the Observer said.
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