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Harrah's Bidders Raise Offer

October 12, 2006|From Bloomberg News

Apollo Management and Texas Pacific Group raised their offer for Harrah's Entertainment Inc. to $15.5 billion after the company's board rejected their first bid, people familiar with the situation said Wednesday.

The buyout companies increased their offer for Harrah's, the world's biggest casino operator, to $83.50 a share from $81, said the people, who declined to be identified because the proposal wasn't being publicly disclosed. The firms would guarantee Harrah's 40-cent quarterly dividend through 2007, one person said.

An acquisition of Harrah's would be the biggest in the casino industry, topping the company's $9.4-billion purchase last year of Caesars Entertainment Inc. Harrah's, owner of hotels including Bally's and the Flamingo, is the target of buyout firms because its shares are cheap given the amount of cash that flows through its casinos, CRT Capital Group's Steve Ruggiero said.

"I was fully expecting that they would have to come through with a higher bid," Ruggiero said.

Harrah's spokesman Alberto Lopez, Apollo spokesman Steve Anreder and Texas Pacific's Owen Blicksilver wouldn't comment. The higher bid was reported Wednesday by the New York Times.

Shares of Las Vegas-based Harrah's fell 5 cents to $76.34. The bid is 26% above the closing share price on Sept. 29, the last trading day before the first offer of $15.1 billion was announced. Harrah's stock peaked May 10 at $82.33.

Harrah's is opening or owns more than 40 properties in 13 states, the Bahamas, Spain and Slovenia. The company is planning a major redevelopment of its Las Vegas Strip properties to compete with new, high-end casinos from Wynn Resorts Ltd., Las Vegas Sands Corp. and MGM Mirage.

Harrah's said Friday that it was dropping its bid with partner Keppel Land to win a concession for a casino and resort on Singapore's Sentosa Island, one of two casino franchises authorized by the city-state. Harrah's lost the bidding for the first Singapore casino to Las Vegas Sands in May.

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