If Harrah’s Did It

A mysterious buyout bid seems to be a focal point of an even more mysterious and unconfirmed meeting of Harrah’s Entertainment’s board of directors in New York, as they ponder whether to take the company private.

While two private equity groups have had an offer on the table since October, a new but disputed player has reportedly sweetened the pot.

Sources close to the talks, which Harrah’s officials refuse to confirm but are widely reported to have taken place December 12-13, say that consensus was elusive and no decision had been made at press time. Harrah’s had set a deadline of December 12th to receive offers.

Casino operator Penn National Gaming reportedly is willing to pay $88.50 a share to acquire Harrah’s. But that report is disputed by some financial sources, as the company would be required to file documentation on the offer with the Securities and Exchange Commission, according to the Las Vegas Gaming Wire.

Penn National had not filed paperwork with the SEC involving Harrah’s as of December 12th.

Analysts have speculated that Penn National is interested in acquiring several of Harrah’s properties, possibly the Rio in Las Vegas and one of the company’s four Atlantic City casinos, the Gaming Wire said.

But some point out that on paper, Penn National’s ability to buy out Harrah’s is a far-fetched notion.

A deal at $88.50 per share would be valued at almost $16.5 billion, based on 186 million outstanding shares of Harrah’s stock. It would also mean that a smaller operator, with 16 casinos and racetracks in 12 states and Canada, was buying the gaming industry’s largest casino conglomerate.

Harrah’s operates more than 40 casinos in 13 states under such brands as Harrah’s, Caesars and Horseshoe.

If Penn National’s bid is credible, the private equity groups, New York-based Apollo Management and Texas Pacific Group of Fort Worth, Texas, could be expected to increase their offers. The two companies bid $81 a share for Harrah’s on October 2nd and reportedly sweetened the bid to $83.50 a share about 10 days later.

The Wall Street Journal and other financial media outlets have reported the companies had boosted the bid to $87 a share.