Harrah's Going Private?

October 2, 2006 5:55 AM Posted by Hunter

I'm on CT for the next couple of days and so I saw this much earlier than I usually would have but Detroit's already got it up, which is great cause I'm late and won't have access all day.

This is VERY interesting.

October 2, 2006 6:36 AM Posted by detroit1051

This is a big news day. Harrah's will get Barbary Coast from Boyd:

AP
Harrah's in Real Estate Swap With Boyd
Monday October 2, 9:16 am ET
Harrah's Entertainment in Deal With Boyd Gaming Unit to Exchange Certain Real Estate

LAS VEGAS (AP) -- Harrah's Entertainment Inc., the world's largest gaming company, said Monday it entered a deal with a unit of Boyd Gaming Corp. to exchange about 24 contiguous acres that Harrah's controls on the Las Vegas Strip for Boyd's Barbary Coast Hotel and Casino.
Financial terms were not disclosed.

The land Boyd will receive is directly north of its 63-acre Echelon Place development site.

Boyd said it expects to see a non-cash gain of about $280 million in the quarter the deal closes.

The transaction is expected to close in the first quarter of 2007, subject to customary closing conditions, including the receipt of all necessary governmental approvals.

Harrah's is also the subject of a report Monday in The Wall Street Journal that says the company is in talks to sell itself to a private equity group. Shares of Harrah's gained $8.07, or 12.2 percent, to $74.50 in electronic premarket trading.

October 2, 2006 7:13 AM Posted by Brian Fey

Yeah this is all pretty amazing. It looks like all the stocks are in the gaming area are benifiting greatly due to his. Most are up 3-5%.

October 2, 2006 8:27 AM Posted by Kevin

I am offlcially crying...

Might have to get on last Barbary Coast trip in sooner than expected.

October 2, 2006 9:28 AM Posted by Hunter

Funny that I was just talking about the BC in my podcast this weekend. I guess that farewell trip will be sooner than I thought.

October 2, 2006 10:47 AM Posted by mike_ch

Never has there been so much drama over such a small piece of land as there has been with Barbary Coast.

I know people like to sleep across from Bellagio for cheap, but didn't think it was with this much interest.

For me, personally, LVB/Desert Inn is the new LVB/Flamingo.

October 2, 2006 9:36 PM Posted by Mike P.

Note:
Oops! Sorry, Mike P. I didn't see your Comment until after I posted mine.

Motley Fool's analyst doesn't like this deal and mostly sees it as evidence that HET is hugely undervalued:

http://www.fool.com/news/mft/2006/mft06100210.htm?ref=foolwatch

October 3, 2006 4:20 AM Posted by detroit1051

>>It is possible that an acquisition of Harrah's could lead to a breakup of the company that would see Harrah's casinos sold piecemeal.

This is the biggest danger, imo. It will be bad news for Las Vegas, and especially the Strip, if a non-casino operator takes over. HET is just beginning to capitalize on its size, brands and marketing ability. If the company becomes a disparate collection of land and properties without a strategy, it will hurt the sector and the Strip. I'm pleased that Motley Fool agrees with me. LOL

http://biz.yahoo.com/fool/061002/115982180010.html?.v=2

October 3, 2006 12:38 PM Posted by mike_ch

You know, losing control from an established operator appears to have worked out well for the Hilton. If you were to tell me that Harrah's casinos were to be split up, I'd need to hear who buys them before I determine whether it's good or bad, but I'd certainly be open to listen.

I feel like one of the greatest dangers in town right now is how the Strip is quickly becoming a two-headed beast, with MGM representing one side of the street and Harrah's the other.

The only nice thing I can say about Harrah's is that they at least try to cater to the middle class, while MGM and the assorted boutique owners are using Bellagio as the baseline for their hotels. Thanks to all these world-class, supreme luxury resorts coming to the strip, normal folks are close to being priced out to Riviera and the Strat.

October 4, 2006 12:51 PM Posted by detroit1051

Mike_ch, thanks for the food for thought about The Hilton and the Strip becoming a "two-headed beast". If this goes through, I hope Gary Loveman stays on. TheStreet.com has an article today:

http://www.thestreet.com/pf/newsanalysis/mediaentertainment/10312837.html

October 6, 2006 10:43 AM Posted by doctor_al

"Never has there been so much drama over such a small piece of land as there has been with Barbary Coast."

How about Jockey Club? Particularly as the owner fought back vs the Steve when Bellagio was being developed, and holds on even now as Cosmo is being built around it.

But BC has intrinsic value that Jockey Club doesn't. More than a place to "sleep cheap across from Bellagio" (can't you still do that at Ballys?), it's a slice of downtown on the strip in many ways, most of them good IMO but probably not necessarily for everybody else.

Even before the implosion, turning this property over to Harrahs is like turning Rick's over to Signor Ferrari (Casablanca).

October 8, 2006 5:47 PM Posted by Hunter

With Harrah's potentially going private, I wonder if Kirk Kerkorian would consider taking MGM Mirage private?

He's talking about dumping his stake in GM (I believe he owns 9% of the company) and thus could potentially have some cash on hand to make it work.

What would the benefits be? MGM Mirage has done well with Wall Street - Jim Murren came from that world and has basically setup a model when company when it comes to reporting and guidance.

October 9, 2006 6:51 AM Posted by detroit1051

I don't see Kerkorian taking MGM private, but they all have to be disappointed with the share price over the past year. I do think MGM will buy Station Casinos or another within a year.

Has anyone else heard Red Rock is having a tough time ramping up to anticipated business levels?

I'm not sure Kerkorian is through with GM yet. The fact Jery York resigned from the Board last week may mean Kerkorian is about to start a war with GM. It will be interesting. I just hope GM isn't dismantled in the process.

I'm meeting friends in Biloxi Tuesday and will stay at Beau Rivage, but I want to check out the recovery at all the Gulf Coast properties. Beau Rivage was totally gutted after Katrina. Even the guest rooms, which were not damaged by the hurricane, suffered subsequent mold and dampness problems. The property should reflect MGM Mirage's current thinking on building new properties because, in effect, BR is a new property.

October 10, 2006 10:04 AM Posted by Van

I think it would blend nicely with Harrah's hint of their future plans if they kept Barbary Coast much as it is for nostalgia and make the hotel into a upper class boutique hotel. Yes, the Riv and Stratosphere may end up being what a lot of people go to, but don't forget the Orleans which is not bad at all. Otherwise, there is always timeshares.

October 11, 2006 11:33 AM Posted by Hunter

Well, the bid for Harrah's was rejected by the board and now, a new higher bid is on the table, $15.5 billion, or $83-$84 per share.

http://www.thestreet.com/_yahoo/newsanalysis/mediaentertainment/10314293.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

October 24, 2006 6:30 PM Posted by detroit1051

$90 Million an acre? This isn't your typical Vegas land deal, but it makes a good story:
http://www.gamingtoday.com/index.cfm?articleid=16992&AIN=713664