Harrah’s rises to gaming’s No. 1

Jun 14, 2005 8:06 AM

Harrah’s acquisition of Caesars Entertainment was completed on Monday following the approval of Nevada gaming regulators last Friday.

The merger created the largest gaming operator in the world with nearly 100,000 employees, 45 casinos in 12 states and nearly $9 billion in revenues.

In Las Vegas, Harrah’s picked up key Strip resorts that include Caesars Palace, Bally’s, Flamingo and Paris Las Vegas.

Other Nevada properties that are now in Harrah’s camp include Flamingo Laughlin, Harvey’s Lake Tahoe and Bill’s Lake Tahoe.

Gaming regulators in New Jersey, Louisiana, Mississippi and Indiana have already signed off on the deal, along with the Federal Trade Commission, which gave its blessing last week.

During Gaming Control Board hearings, Harrah’s officials said the deal was worth $9 billion, making it the largest merger in the industry’s history.

Harrah’s is buying Caesars for $1.87 billion in cash and $3.27 billion in stock. Harrah’s will assume $3.86 billion in Caesars debt. Caesars stockholders have until Friday to trade in their shares for Harrah’s common stock. They have the option of receiving cash in lieu of Harrah’s shares.

The total value of the deal is about $400 million less than when the merger was first announced 11 months ago. During that time, Caesars has paid off debt by selling assets domestically and abroad, thus lowering the deal’s overall price.

Since last July, Caesars has sold the Atlantic City Hilton, Bally’s Tunica and Bally’s New Orleans. The sale of the Reno Hilton and Caesars Tahoe are still pending.

Harrah’s sold two casinos, Harrah’s East Chicago and Harrah’s Tunica.

According to published reports, Harrah’s plans to operate its casinos under three brand names: Harrah’s, Caesars and Horseshoe.

Harrah’s is expected to announce changes in staffing and management of former Caesars properties very soon.

Middle and upper-level managers in Caesars race and sports, public relations, casino marketing and other departments have been waiting for word on their fate.

Some analysts believe Harrah’s will consolidate some functions, such as marketing and player rewards, of which Harrah’s operation is considered the industry standard.

But some long-term Caesars staffers weren’t worried about their jobs.

"We’ve been through this before," said a highly-placed manager in Caesars public relations office. "We’ve gone through mergers with ITT, Starwoods and Park Place. We made it through those acquisitions ”¦ we’ll make it through this one."

The manager said a massive celebration party is planned at Caesars Palace on Thursday.

"This is for Harrah’s and Caesars managers from around the country," he said. "I guess you could say it’s a kind-of get acquainted party. We’re expecting about 2,000 people to attend."