Harrah's Deal Approved by Shareholders
Updated: Friday, April 6, 2007 9:31 AM
Posted: Friday, April 6, 2007 9:31 AM
Harrah's Entertainment Inc. shareholders approved a $17.1 billion buyout by two private equity groups April 5 in the largest deal ever to take a publicly held casino company private, officials said.
Shareholders controlling 66 percent of outstanding stock approved selling the world's largest casino company to Apollo Management Group and Texas Pacific Group, Harrah's officials announced.
Las Vegas-based Harrah's board had unanimously recommended approval.
Harrah's is the world's largest casino company by revenue, operating 39 casinos across the United States, including Caesars Palace, Bally's and Paris on the Las Vegas Strip. Included in its holdings are racetracks such as Louisiana Downs in Bossier City, La., a 50% ownership in Turfway Park in Florence, Ky. and Bluegrass Downs harness track in Paducah, Ky.
The deal still requires approval from gambling regulators in more than a dozen states and several tribal nations where Harrah's operates, said Frank Schreck, a Las Vegas lawyer who represents Harrah's in regulatory matters.
Nevada gambling regulators could be asked to take up the question this fall, Schreck said.
The shareholder votes were tallied after a 10-minute meeting attended by about 100 shareholders that was closed to the public. Harrah's spokesman Alberto Lopez characterized the session as "quick, genial" and "an exercise in American capitalism that worked flawlessly."
Apollo spokesman Steven Anreder said the New York-based company was pleased with the vote. He declined further comment. A representative for Texas Pacific, based in Fort Worth, Texas, declined immediate comment.
Harrah's shareholders emerging from the voting meeting at Caesars Palace hotel-casino on the Las Vegas Strip said they were pleased with the $90-per-share buyout offered in December. They said the meeting, headed by Harrah's chief executive Gary Loveman and corporate secretary Michael Cohen, proceeded routinely.
"It went according to plan — cut and dried," said Lou Goldstein, 84, a retired Chicago coin dealer who lives in Las Vegas. "The decision was made by principal shareholders."
Goldstein characterized himself as a small shareholder who had been treated well by Harrah's for the past 15 years. He said he cast his vote for buyout.
"Ninety dollars is a good price," said stockholder Daniel Buhr, 71, a retired CPA from Waterloo, Iowa, who said he voted to approve the deal.
Harrah's shares rose 14 cents to close at $84.90 Thursday on the New York Stock Exchange. Shares have traded from $58.22 to $85.58 during the past 52 weeks.
Harrah's won European Union approval for the buyout April 4 after the European Commission received no complaints from rivals and identified no antitrust problems. The EU usually rules on combinations in which companies have joint global revenue of more than $6 billion.
The buyout, which has the buyers also assuming $10.7 billion in debt, represents the seventh biggest leveraged buyout deal of any kind of company. The largest ever completed to date was RJR Nabisco Inc.'s $25 billion acquisition by Kohlberg Kravis Roberts & Co., completed in 1989.
Harrah's debt load will nearly double to $21 billion and its priority will shift to paying it down instead of reinvesting in growth, according to documents filed with the Securities and Exchange Commission.
Harrah's also has interests in casinos in Canada and Uruguay and owns U.K.-based London Clubs International PLC, which operates seven casinos in the U.K., two in Egypt, one in South Africa and is a consultant for a casino in Lebanon.
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