Harrah’s considers buyout offers

Steve Tripoli Dec 13, 2006

TEXT OF STORY

MARK AUSTIN THOMAS: Harrah’s Entertainment is the largest casino company in the world. Today its board meets to consider several buyout offers. At least three private equity groups and a hedge fund are in the running. Why all the interest? Marketplace’s Steve Tripoli explains.


STEVE TRIPOLI: It isn’t just about Harrah’s.

Joseph Weinert of Spectrum Gaming Group in New Jersey says private equity firms are flush with cash and lots of gambling companies look attractive.

JOSEPH WEINERT: The returns are good compared to many other industries. And I think Harrah’s is attractive because they do have a lot of industry-leading information technology tools.

Tools like a top rewards program for frequent gamblers.

Casinos are very hot on at least three continents. Brian Gordon at Applied Analysis in Las Vegas says that means they offer investors something more than a fat revenue stream.

BRIAN GORDON: I think there’s also an interest in the underlying real estate of many of these properties.

No surprise with holdings on the Vegas Strip valued at $30 million an acre these days.

Joseph Weinert says that means companies like Harrah’s may well be broken up by new owners.

WEINERT: So the Harrah’s of tomorrow may be considerably different than the Harrah’s of today.

So while casinos may not always be a winner for gamblers, investors see the industry itself as a heck of a bet right now.

I’m Steve Tripoli for Marketplace.

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