Metaphorically, of course. Since both Bill Harrah and Jay Sarno are deceased, I’m talking about the companies that claim them as founders: Harrah’s Entertainment and Caesars Entertainment. According to the Wall Street Journal, quoted here by Reuters, Bill’s company is going to acquire Jay’s, the second major gaming merger in a month:
Harrah’s Entertainment Inc.is near a deal to buy rival Caesars Entertainment Inc, in what would be the gambling industry’s second major takeover in a month, The Wall Street Journal reported on Wednesday.
The terms of the proposed transaction were not immediately clear, the newspaper said. If consummated, the deal would make Harrah’s the biggest gambling company in the world with $8.8 billion in revenue and as many as 54 casinos, according to the Journal.Based on Caesars’ closing stock price of $13.92 on Tuesday, the company has a market value of about $4.3 billion, not counting about $4.5 billion in debt, the Journal said.
Last month, MGM Mirage agreed to buy Mandalay Resort Group for $4.8 billion plus debt.
Harrah’s and Caesars, which owns Caesars Palace, Paris Las Vegas, Bally’s and other casinos, began talking after the MGM Mirage-Mandalay deal was reached, the Journal said, citing unnamed people familiar with the situation.
Buying Caesars Entertainment would give Harrah’s a stronger foothold on the Las Vegas strip, where the Harrah’s casino is not one of the top attractions, the Journal reported.
The Harrah’s acquisition plan, like MGM Mirage’s, was likely to attract scrutiny from antitrust regulators at the U.S. Federal Trade Commission or Justice Department, as well as at several states, the Journal said.
Of course, this is less about Bill Harrah and Jay Sarno than it is about Gary Loveman and Wally Barr, respective leaders of HET and CZR.
Is this deal a surprise? Not really. The media reported on rumors of it a month ago, as you can see right here.
What does this deal mean? For the Las Vegas Strip (unless HET sells off some properties), the company would own:
Harrah’s Las Vegas
Rio
Caesars Palace
Flamingo
O’Shea’s
Bally’s
Paris
The Horseshoe brand, which HET has wanted to put on a new property
This is a lot of casinos; you would now have the entire Strip south of the Venetian controlled by two companies, with two exceptions: the Tropicana and Aladdin/Planet Hollywood. And, of course, the Hawaiian Marketplace.
The comapnies also overlap in most of the other major American gaming markets: Reno, Tahoe, Tunica, the Gulf Coast, New Orleans, and of course Atlantic City.
In AC, HET would own between 5 and 7 casinos, depending on how you consider Bally’s Atlantic City:
Harrah’s Atlantic City
Showboat
Bally’s Atlantic City
–Claridge
–Wild Wild West
Caesars Atlantic City
Atlantic City Hilton
When you consider that the city has 12 or 14 casinos, this means about as big a concentration as MGM MIRAGE will have on the Strip, but with less room for growth.
Look for more on this news story. Like I said with the MGM/Mandalay merger, even if this one doesn’t go through right now, look for future consolidation to be the trend.
UPDATE: A new article from Reuters tagged the deal at close to $10 billion: