Harrah’s Signs Agreement with TPG and Apollo
February 1st, 2007Author: Mark Newman
Harrah’s Entertainment, Inc has entered a new stage of its development by having signed an agreement with Texas Pacific Group (TPG) and Apollo Management, L.P. According to the agreement, TPG and Apollo will get Harrah’s in “all-cash transaction valued at approximately $27.8 billion, including the assumption of approximately $10.7 billion of debt”.
The agreement has been approved by the Harrah’s Board of Directors. Their decision was based upon the recommendation given by a Special Committee of non-management directors who have thoroughly studied Harrah’s strategic alternatives. All the Harrah’s stockholders will get $90 in cash for each outstanding Harrah’s share.
The decision made by Harrah’s Entertainment does not mean the change in direction, but the change in management. So, the company are looking forward to it, their new development and goals.
David Bonderman, TPG founding partner, said, “We are delighted to be joining with the excellent management team at Harrah’s and our private equity partners to continue to build on the Company strong foundation. Taking a long-term perspective, we believe we will be able to help Harrah’s deliver on its growth strategy”.
Leon Black, founding partner of Apollo, said, “Harrah’s has an excellent brand name, strong cash flows, an impressive portfolio of properties, a very talented management team, and highly skilled employees. Together with our private equity partners, we look forward to building on Harrah’s successful track record of operational success…”
The transaction is supposed to be over in a year. Until its close Harrah’s is going to play its stockholders a regular quarterly dividend of $0.40 per share. In case the transaction is note completed, TPG and Apollo have agreed to raise “the purchase price at a rate of $0.01973 per day per Harrah’s common share beginning March 1, 2008”.
