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After languishing for about two months, it looks like the buyout for Harrah's (NYSE:HET) will get some traction. Tomorrow, the company's board will meet to discuss the offers.
The most promising bid (and perhaps the only one) is from Apollo Management and Texas Pacific Group. According to a report from the Wall Street Journal [subscription required], it looks like it will be $87 per share (which is up from the prior bid of $83.50).
The other group includes Penn National Gaming (NASDAQ:PENN), a casino operator that is much smaller than Harrah's, and D.E. Shaw, a major hedge fund. However, it looks like it will be difficult for them to arrange a credible financing package.
True, Harrah's has a great collection of brands and generates lots of cash. But the deal will mean an enormous debt load – making things quite risky. Harrah's has some valuable real estate holdings in Vegas, which could fetch premium prices. That could be used to pay down the debt. In fact, the Motley Fool has a great analysis on this point.
Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.
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Reader Comments (Page 1 of 1)
12-15-2006 @ 7:39AM
Attilla said...
As an employee I can testify that we all have our fingers crossed hoping that Harrah's will accept ANY bid. The reason that the dealers in Atlantic City at all Harrah's properties are now organizing with the UAW is because we are fed up to HERE with their management style. Love"lace" makes Scrooge look like a philanthropist. "Disgruntled" is the understatement of the century!