The gambling behemoth Harrah’s Entertainment – which owns more than 50 casinos worldwide and the rights to the WSOP – is gearing up for a history-making takeover, as the formerly public company is about to be bought by two large private investors in the largest ever private takeover of a publicly held casino.
Buyers Apollo Management Group and Texas Pacific Group intend to buy Harrah’s for $31 billion, although according to Kelvin Davis, a partner in Texas Pacific Group, this figure includes debt transactions and the actual amount of equity involved is about $17.1 billion.
In order to complete the takeover, the buyers must receive permission from at least 10 state regulators. So far, they have the approval of the Louisiana, New Jersey, Iowa and Mississippi state casino regulators, and are confident about the remaining ones. The potential buyers plan to buy Harrah’s, hold on to it for 5 to 10 years and then sell it again at a profit.
Eric Press, a partner in Apollo, stated they will keep a hands-off approach to running Harrah’s: "We invested in Harrah's because we have a tremendous amount of confidence in (chairman and CEO) Gary Loveman. His plans for the business are our plans. We don't intend to change a thing.”
Harrah’s CEO Gary Loveman is looking forward to the takeover, saying it is the ideal combination of additional funds and permission to continue his expansion strategy with minimal interference: "We don't frankly anticipate that they're going to help us run table games better or train us in how we run the buffet," Loveman said.
Although after the merger Harrah’s debt is expected to double (from $12.5 billion to $25 billion), the Chief Financial Officer Jonathan Halkyard remains optimistic: "I'm very confident that the corporation will remain very stable financially," he said. "We can weather a storm, and continue to seize on opportunities that we see."
The deal is expected to go ahead this December or in early 2008.