Penn eyes takeover of Harrah’s Ent.

Dec 5, 2006 5:54 AM

Forget the "speculation" about Penn National Racing perhaps having an interest in Harrah’s.

It’s a fact.

Penn wants Harrah’s, according to gaming industry sources who confirmed that there were talks as recently as several days ago. The sources spoke on the condition they not be identified since they are not ordinarily authorized to speak on such matters.

Penn Chairman Peter Carlino was in Las Vegas last week meeting with some of the Harrah’s brass, according to well-placed sources familiar with the Penn.

Two private equity groups, the Texas Pacific Group and Apollo Managenent, are ahead of Penn for the moment, having made a $15.5 billion offer for Harrah’s, but a committee of non-management Harrah’s directors continues to study the offer.

There had been no action on it as of a couple days ago, so for the moment, Penn remains a very interested spectator.

There is precedent in gaming for a relatively small company such as Penn trying to swallow a giant such as Harrah’s. That’s what occurred when Starwood bought ITT Sheraton Corp. for $14.3 billion in 1997.

Another "minnow" swallowed another "whale" when Alliance Gaming bought Bally Manufacturing.

If Carlino is unable to acquire all of Harrah’s, then he would probably like to buy at least some of Harrah’s assets that might not be seen as core holdings by potential private equity owners.

Some of those casinos would fit nicely with the current line-up of Penn casinos across middle America.

Wynn likes AC

Steve Wynn likes what he sees when he looks at Atlantic City and thinks about all that it might be.

There’s a new age dawning and all the best evidence suggests Wynn wants to be part of it, although he is reluctant to offer much in the way of details for the moment. The success of the Borgata, he says, is telling a story that has not been lost on anyone taking a close look at this market.

"We had predicted," Wynn said, "that any hotel built in the modern era without what I would call the influence of regulators would result in a design that is more friendly and sensitive to the public," Wynn said.

Borgata is just such a place.

"We believed that any hotel built in the modern era would dramatically outperform anything built during the first phase of Atlantic City," he continued. "I believe that MGM and others are going to go further in Atlantic City.

"The potential exists for Atlantic City to become fashionable and exciting in terms that it has not been in the past. I believe that market can be broadened. I believe that Governor (Jon) Corzine and the political leaders of the community are feeling very up tempo about the place.

"A lot of people are sort of kicking the tires in Atlantic City," Wynn added. "We’ll see whether good taste and imagination prevail"

Wynn and Donald Trump are believed to have discussed a joint venture that would involve real estate on which the Boardwalk Arena and the adjacent Trump Plaza now sit. Both men say their talks are in a preliminary stage, and that it is much too early to say more.

 

 

The prospect of more than 30,000 slots at seven race tracks and two stand-alone facilities in the Cleveland area has been rejected by Ohio voters who turned down a legal gambling proposal for the third time in 16 years.

The vote was 2,080,741 for slots and 1,583, 961 against slots. The issue never gained any real traction with voters as illustrated by the fact that proponents of the proposals spent about 20 times more than was spent by the successful opponents of the plan.

 

Donald Trump says he is not likely to redevelop the iconic Steel Pier in Atlantic City into anything resembling a site for gambling.

"We are not anxious," he said, "to transfer the energy from a casino floor (at the nearby Taj Mahal) to another area."

It is much more likely that the Pier will be used for a condo development of some kind. Few memories are more associated with the early days of Boardwalk tourism than the girl astride a horse jumping into a water tank.

 

Resorts International COO Roger Wagner says he can’t understand the insistence of a news columnist who keeps dropping hints to the effect that the company’s Las Vegas Hilton is due to be imploded.

"If that was the case," he says, "I think we would probably stop spending money on the place and pay down some debt."