Does Harrah’s have PPE on its mind?

February 27, 2001 7:01 AM
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IS HARRAH’S EYEING PARK PLACE? Believe it or not, several in-the-knowsters say the pipeline is abuzz with rumors that Harrah’s Entertainment (HET) has a Park Place Entertainment (PPE) acquisition on its drawing board.

"The way I get it," said a pipe, "it would be nearly a $10 billion transaction combining stock and debt. If so, it would make it the largest transaction in the history of gaming, overshadowing the $6.5 billion (stock and debt) paid when MGM Grand Inc. (MGG) bought Mirage Resorts.

"A source in the financial community — aware of the rumor — said it would make sense mainly as a stock transaction. Right now, Park Place is trading at nearly $11 a share. HET closed Monday at a little over $31 a share. A 2-for-1 stock offer with PPE investors getting one share of HET for every two PPE shares would certainly put smiles on the faces of many Park Place shareholders. If that were the offer, it would price out at about $4.5 billion, since there are nearly 300 million shares outstanding. The last time I looked, Park Place was in debt more than $5 billion.

From a rosebud: "I’m hearing the same stories you’re hearing. But keep in mind, this is Las Vegas. And we’re talking about the gaming industry, where rumors are a dime a dozen.

"However, the sources of the rumors are credible. At the same time, it makes a lot of sense for Harrah’s to want to add handsomely to its already vast casino holdings. Park Place, the company practically handmade by Arthur Goldberg, owns and/or operates casinos from Maine to Spain. Just in Nevada alone, PPE owns nine casinos. There are three more in Atlantic City, five dockside casinos in Mississippi, riverboats in Louisiana and Indiana, as well as casinos in Canada, Australia, Punta del Este, Uruguay; Johannesburg, South Africa; two cruise ships, and a slots operation at a racetrack in Delaware.

"The thought of putting all these pieces into your portfolio by offering stock and assuming debt makes an awful lot of sense to me."

As usual, this news before it’s news broke as we were rushing toward deadline. Quick calls were placed to executives at both concerns. At deadline I have been unable to get a yea or nay. That’s certainly no indication of anything. Both concerns are famous for keeping stiff upper lips.

Stay tuned. If this rumor holds water it would be one of the biggest scoops in Heard on the Strip’s career.

WHOLE LOTTA SHAKIN’ GOING ON! To paraphrase a tune, The joint is rocking! A number of key people have changed jerseys since our last report. And in the case of one casino exec (Jon Jaggers), the pinstripes of Park Place Entertainment (PPE) came off briefly for an MGM MIRAGE (MGG) jersey. But in less than a New York minute, Jaggers decided to remain with PPE to become vice president of Caesars Palace. He will report to Mark Dodson, PPE’s West Coast top gun.

I’ll try to explain the above, but let’s go to the Aladdin so I can tell you about Rich Waters and John Emery. Both wore Caesars pinstripes for years. Waters just left the Palace to lead the Aladdin’s marketing department.

As for Emery, who has been around the casino horn at Caesars, Desert Inn and Stratosphere, he now takes up the hunt as an executive in player development at the Aladdin.

Reports of still another top-notch executive moving to the Aladdin could not be confirmed.

Despite the negative press about London Club and its Aladdin holdings, the casino is acquiring top caliber executives, which indicates that Bill Timmins, president and COO, is going full steam ahead to make the new Strip resort a success.

Go back to Jaggers a sec. The report I get is that he begged off a commitment to join up with MGM MIRAGE at Bellagio. The action may very well support rumors making the rounds that Dodson will elevate John Shigley, a vice president at Caesars, to the post of president.

If the Shigley story were confirmed, he would be replacing Dean Harrold, who left Caesars with 2½ years remaining on his three-year contract.

AND ON A SMALLER SCALE! "Wouldn’t you like to be sitting in on the talks taking place in Mesquite?" queried a pipe.

What talks are those?

"Word is that Si Redd has been talking with Randy Black about the sale of his Oasis Hotel. If you know Cy, you’re aware that he’s a tough negotiator. And certainly no one is going to sell Randy Black short. After all, he ‘stole’ the Casablanca Hotel/Casino from Players’ International for $32 million. The place was worth three times that amount."

More pipe: "It’s still too early to say if the talks will develop into anything substantial, but it will be interesting just to speculate how they’re going."

SPEAKING OF BARGAINS! Just how much of a bargain did shrewd Jack Binion get when he bought the two Empress riverboats a couple years ago? A lawsuit says it was a terrific bargain at $629 million.

Binion is under pressure from the Illinois Gaming Board to sell the Empress boat in Joliet, Ill. When word got out, Binion was flooded with calls from prospective buyers who may have to pay more than $500 million for the successful facility.

That leaves the Empress riverboat in Hammond, Ind., whose value has been estimated at more than $300 million.

With those numbers being bandied about, a former partner in the Empress has sued Binion for $230 million, saying the two boats were worth more than $800 million when the sale went through.

SANDOVAL’S HARVARD FORUM! "It might have been good p.r., but Brian Sandoval’s trip to Boston to participate in that college betting forum hardly raised an eyebrow," reported our eastern pipe.

"Brian’s visit prompted a few questions from a few students, but that’s about all it accomplished. He made the trip after the Nevada Assembly formulated a joint resolution urging Congress to refrain from passing any legislation that would hinder Nevada’s ability to license and regulate sports wagering.

"And," the pipe added, "since no big name from the NCAA or the college ranks showed up for the forum discussion, it failed to get strong media attention.

"Still, Nevada will have to keep a high profile if it wants to prevail in Washington."

CONGRATS ARE IN ORDER for Hyatt Gaming and its top gun, Larry Lewin. I am hearing nothing but good things about biz at Hyatt’s resort at Lake Las Vegas.

Said a pipe: "The arrow is pointing up for both room occupancy and casino revenue. Lewin has named Ricardo Ingrassia as director of casino operations. Bells are ringing. It must be a pleasing sound to the ears of Lewin, a long-time casino executive who oversees Hyatt’s gaming properties.

WASHINGTON VISITOR! Terry Lanni, MGM MIRAGE (MGG) numero uno, was dinner chairman and master of ceremonies Monday evening when the Republican Governors Association and its 32 GOP governors held a fund-raising dinner in the nation’s capital.

The reason for the dinner was to toast the governors and raise funds for the GOP’s busy election slate. Keynote speaker at the affair was Vice President Dick Cheney.