New York Stock Exchange and will take Las Vegas-based Harah’s, the world’s largest casino operator, private and exit the traditional public market.

Sources said that the financial terms of the acquisition were agreed upon as principal last week. New York-based Apollo Management and Texas Pacific Group in Fort Worth, Texas, pledged to purchase about 190 million shares, or $17.1 billion, of Hara Entertainment’s outstanding shares, by paying $90 per share. In addition, the companies will bear the company’s $10.7 billion in debt.

The deal will be the fifth-largest leveraged buyout of the year and the sixth-largest ever, according to Thomson Financial.

The private equity group will pay a premium of about 36% to the closing price of Hara shares on Sept. 29, the last trading day before the original offer of $81-per-share goes public. Shares of Hara shares closed 14 cents, or 0.17% higher, at $82.32 on Tuesday.

Game analyst Matthew Jacob at Majestic Research in New York summed up the deal as an industry-changing event. Investors are already speculating that the next private equity scheme will buy the casino operator.

“I think gaming industry investors see the deal as (historic) and they see everything that makes the company’s stock more attractive to private equity,” Jacob said

Dennis Farrell of Wachovia High Yield Research in Charlotte, N.C., said the deal raises valuation standards for the gaming industry in investors’ minds. However, small casino operators who want to make an open deal may take action to stop litigants.

“I don’t know if this is an industry-changing deal, but valuations are going up and they’re going to keep going up,” Farrell said. “Some companies are going to get defensive, and probably take over smaller operators. What’s clear is that if Harah’s leverage buyout can be completed, any gaming company will be targeted.”

MGM Mirage President and Chief Financial Officer Jim Murren said the deal was the largest ever for a casino operator, beating the $6.7 billion acquisition of Mirage Resorts in 2000 and the $7.9 billion Mandalay Resorts Group last year.

“The gaming industry is very small, and to be this big of any industrial size is historic,” Mullen said. “The valuation of casino companies is undergoing a transformation. We paid eight times cash flow for Mirage, nine times cash flow for Mandalay. Now gaming companies are getting 13 to 14 times cash flow.”

Under the terms of the deal, the private equity group has more than a year to complete the deal, which requires approval from Hara’s shareholders and approval from regulators in 13 states where Hara operates nearly 40 casinos, including Nevada.

Game Management Board Chairman Dennis Nilander said Tuesday it was difficult to predict how long the investigation process would take because it involves two large private equity firms new to Nevada.

“The composition of their corporate structure or how many individuals should be licensed is unclear,” Nealander said, “and we will do what we can to accommodate all the deadlines they may have.”

Nealander said it recently took more than a year to finalize a licensing deal for the gaming industry private equity fund. He said it took more than a year for Los Angeles-based Oaktree Capital Management to complete a deal to buy a third of its Canary Casino Resort, and included licenses from eight individuals and companies.

Nealander expects other casino company private equity deals to come, but for now, regulators need to look at the deals on a case-by-case basis.

Harrer Chairman and CEO Gary Loveman said in a statement that Apollo and Texas Pacific supported the company’s growth plans.

“We’re going to have owners who share our vision for Hara, fully support our current strategy, and are committed to helping us execute it,” Loveman said. “This will not be a change of direction, it will be a change of ownership.”

Joseph Weinert, spokesperson for industry consultant Spectrum Gaming, told CBS MarketWatch that private equity firm support for Harra’s plan is an important aspect of the deal’s feasibility.

“The key statement was Gary Loveman saying that new owners want to continue on the path previously laid out by management,” Bynert said. “This indicates that Haras will be moving forward with major planned expansions to Las Vegas and Atlantic City. I also feel some relief that Haras will be able to pursue a vision without having to worry about Wall Street’s quarterly mindset.”

The deal was the subject of several lengthy meetings between Hara’s board and private equity group representatives in New York last week and Sunday. Hara’s board voted Tuesday morning to approve the final agreement.

Terms and conditions of the merger agreement:

The management of Loveman and Hara will be maintained by equity groups and run the company.

Harrah’s can request excellent offers from interested third parties for 25 days.

Harrah’s executives said the company will continue operating as usual while private equity groups seek regulatory approval. The company operates brands such as Harrah’s, Caesars and Horsche. In addition, Harrah owns the lucrative World Series of Poker and also operates casinos in Canada and Uruguay.

Harra’s has development deals in countries such as Spain and Slovenia and is in the process of acquiring British casino operator London Clubs International.

In 2005, Hara reported $236.4 million in revenue from $7.1 billion. The company now has a market capitalization of nearly $15 billion.

Harrah’s purchase comes 18 months after it became the biggest casino operator in the gaming industry after acquiring rival Caesars Entertainment for a record $9 billion at the time.

“Next year, sponsors will get regulatory approval, but our plan is just to keep our heads down and keep our business running,” said Jonathan Halkyad, CFO of Hara. “We have a number of growth plans, and our plan is to continue those efforts.”

Game analysts believe the sale to a private equity firm will give Harrah more freedom to continue its expansion plans without scrutiny from shareholders seeking a quick return on their investments.

In Las Vegas, Haras operates seven casinos, including Haras Las Vegas, Flamingo, Caesars Palace, Ballis, Paris Las Vegas, Rio and Imperial Palace, and is in the process of purchasing the Barbary Coast. The deal is the result of a land swap with Boyd Gaming.

The Barbary Coast and its 4.4 acres will allow Hara’s about 350 acres to be adjacent to the strip for development purposes. According to Hara, the total price of the land was around $13 million (W13 million) per acre. The company is exploring options for 350 acres, including redeveloping some of the casino properties.

Bear Stearns gaming analyst Joe Greff said how Harrah runs the business while the deal goes through the approval process could affect other casino companies.

“If Harrah pursues an aggressive (capital expenditure) program in Las Vegas with meaningful movement and disruption, this will benefit existing strip operators, namely MGM Mirage and Wynn Resorts,” Greff said.

MGM Mirage’s Murren said he was happy that Loveman and his team remained on board. He expects the company to continue planning, especially with land that it controls on Strip.

“I don’t think Haras is doing this deal to slow down growth,” Mullen said. 바카라사이트

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