Mega casino merger pending
Several casinos in Mississippi may be affected

by JULIE WHITEHEAD
DBJ Contributing Writer

The future is still unclear for casino properties in Tunica, Memphis, and the Gulf Coast impacted by the proposed merger of Harrah’s Entertainment and Ceasars Entertainment, announced this past July, with spokesmen for both companies noting that no final decisions have been made on consolidating the various properties.

On July 15, 2004, Harrah’s Entertainment announced its intention to acquire Ceasars Entertainment in a stock transaction that would be the largest in gaming-industry history. The merger would create the largest gaming company in the world, with Harrah’s and Ceasars owning just under 60 casinos total in the United States and abroad.

The merger still has numerous regulatory hurdles to clear, including Federal Trade Commission approval. To that end and to satisfy rules about concentration of casinos in a single market, Harrah’s announced in September that Harrah’s East Chicago, Harrah’s Tunica, Altantic City Hilton, and Bally’s Tunica would be sold to an outside group affiliated with Colony Capital. Harrah’s and Ceasars agreed to sell the four properties in connection with the merger, although the sale is not conditioned on closing of the merger, according to a press release at the time prepared by Harrah’s.

Among other area properties that could possibly affected by the merger are Ceasars Southern office in Gulfport, Mississippi, which oversee six casinos in Mississippi and Louisiana, and Harrah’s Memphis office, which controls operations at Harrah’s seven southern casinos.
Robert Stewart, Ceasars Entertainment’s senior vice president for corporate communication, referred questions about the status of those offices to Harrah’s personnel. Gary Thompson, a spokesman for Harrah’s, said that the entire corporate structure of both companies was being studied to the extent that the FTC would allow at this time. “We can’t collect all the information until (the merger) has been approved,” said Thompson. Harrah’s officials expect the FTC to issue a ruling at some time in the first quarter of 2005, with the companies expected to close the deal by the end of the second quarter, Thompson said.

Thompson noted that Harrah’s seven other acquisitions over the past few years have taught the company to look carefully at itself as well as the company it was purchasing to make sure that the “best practices” of both companies are retained after the merger. So the decisions on consolidating operations will depend on the strengths each company brings to the table at the time of the merger, Thompson said. “Ceasars is obviously better at staging entertainment than we are—they have some of the biggest entertainers in the industry performing for them,” said Thompson. Ceasars also brings strong retail shop credentials and a reputation for high-end international table gaming to the table, according to Thompson.

Under terms of the agreement, Caesars shareholders will receive an aggregate of $1.8 billion in cash and 66.3 million shares of Harrah's Entertainment common stock. Caesars shareholders will be able to elect to receive solely shares of Harrah's common stock or cash, to the extent available. The agreement calls for a certain number of Caesars' current directors to join the Harrah's Entertainment board. Caesars operates 28 casinos with about 2 million square feet of gaming space and approximately 26,000 hotel rooms. The company has a significant presence in Las Vegas, Atlantic City, and Mississippi.

Tunica is now the number three gaming destination in the United States with nine casinos operating in the northwest corner of the state, drawing tourists from Memphis and points throughout the Midwest and Mid-South. Gary Loveman, Harrah's Entertainment president and chief executive officer, had high praise for the properties it’s acquiring in Mississippi as a result of the merger. "We are adding attractive assets in stable markets with outstanding long-term growth prospects where we have a demonstrated record of success. Our network will also be enhanced as Caesars provides us access to new markets and new customers,” Loveman noted in the merger announcement. DBJ