Tuesday, June 08, 2004
Copyright © Las Vegas Review-Journal

FTC lets Harrah's acquisition proceed

Harrah's Entertainment late Monday crossed the last major hurdle in its $1.45 billion buyout of Horseshoe Gaming Holding Corp. when the Federal Trade Commission voted unanimously to close its investigation into the deal.

"Obviously, there's one more step to go, but we're looking forward to closing this transaction," Harrah's spokesman David Strow said.

The FTC action clears the way for Harrah's to proceed with the acquisition, pending approval by the Louisiana Gaming Control Board, which is scheduled to consider the transaction June 14.

The transaction, agreed to by Harrah's and Horseshoe Gaming in September, has already been approved by gaming regulators in Indiana and Mississippi. Horseshoe Gaming operates riverboat casinos in Hammond, Ind.; Bossier City, La.; and Tunica, Miss.

Assuming Louisiana regulatory approval is received, Harrah's intends to close on the acquisition on or around July 1.

Deutsche Bank analyst Marc Falcone said closing the deal will boost Harrah's earnings in the latter half of 2004 and throughout 2005 and eliminate an issue that has helped hold down its stock.

Joe Greff, gaming analyst at Fulcrum Global Partners, an independent Wall Street investment research firm, said the deal will prove positive for Harrah's in the long run because the price is reasonable and Harrah's will enjoy synergies that will help cut costs.

He said it also gives Harrah's the opportunity to further develop an important brand name across the country as well as in Nevada, and to rebrand properties they own in the Midwest and elsewhere.

Harrah's bought the right to operate the casinos in Nevada under the Horseshoe name in April at the same time that Binion's Horseshoe was sold to Chester, W.Va.-based MTR Gaming Corp., but will not have rights to the name elsewhere until the Horseshoe Gaming deal is completed.

Loveman said in September that the buyout has a "very significant offensive component. (Horseshoe Gaming) has high-performing assets with a significant growth profile ahead of them."

The Horseshoe name "has tremendous brand equity. We believe casinos opened in any area under the Horseshoe brand would do better than any other brand name than Harrah's," he said.

Loveman also conceded the deal is a partially defensive move to keep another competitor from acquiring Horseshoe Gaming's riverboat casinos.

Sources had said that Las Vegas-based Ameristar Casinos was offering $1.39 billion for Horseshoe Gaming.

Greff said the buyout will prove positive for Harrah's in the long run because it also "diversifies cash flow away from (more competitive) gaming markets such as Atlantic City."

Harrah's closed Monday at $53.69, up $1.27 or 2.2 percent on volume of 2.3 million shares, triple normal trading volume.