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Harrah's to Buy Harveys Casinos

April 25, 2001|From Bloomberg News

Casino operator Harrah's Entertainment Inc. agreed to buy Harveys Casino Resorts for $675 million in cash and liabilities to expand in Stateline, Nev.; Iowa; and Colorado.

The purchase has been approved by the boards of Harrah's and the seller, closely held real estate firm Colony Capital of Los Angeles. The purchase price includes $50 million of off-balance-sheet liabilities, said Marzena Jablonska, a spokeswoman for Colony.

With the purchase, Harrah's will bring gamblers in Iowa and Colorado into its customer loyalty program, which rewards play at Harrah's casinos, including Las Vegas and Illinois. In Stateline, on Lake Tahoe's south shore, Harrah's will link its casino with the Harveys there.

"It is a good fit strategically," said Phil Satre, Harrah's chairman and chief executive. "The acquisition gives us a way to gain access to new customers and build loyalty,"

Las Vegas-based Harrah's, which operates Harrah's and Bally's hotel/casinos, would acquire Harveys casinos in Council Bluffs, Iowa, and Central City, Colo.

Colony acquired Stateline-based Harveys in 1998 for $420 million. In January, Harveys terminated a planned $1.28-billion purchase of Glendale-based rival Pinnacle Entertainment Inc. after it had trouble raising funds for the acquisition.

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"We typically hold assets from three to five years," said Jonathan Grunzweig, a principal at Colony. "We're happy to recognize our gains from our first two years of ownership with the asset and let a high-quality buyer take the asset to the next level."

Colony is led by Thomas Barrack, a former money manager for the Bass family of Texas. The sale of Harveys is expected to close by the end of the year, the parent firm said.

Harrah's shares rose $1.45 to close at $36.76 on the New York Stock Exchange. The purchase was announced after the close of trading.

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