Harrah’s, Caesars discussing merger

Las Vegas firms seek to top gambling industry

? Harrah’s Entertainment Inc. is in talks to buy larger gambling rival Caesars Entertainment Inc., a source familiar with the negotiations said, to leapfrog ahead of the proposed merger of MGM Mirage and Mandalay Resort Group as the biggest gambling company in the world.

The two Las Vegas-based companies could announce an agreement this week, the source said Wednesday, speaking on condition of anonymity.

“The likelihood is high,” the source said. “Things are moving along.”

News of the talks, first reported in The Wall Street Journal and Las Vegas Review-Journal, sent Caesars shares up nearly 15 percent, while Harrah’s stock slipped.

The companies began negotiating after MGM Mirage cemented a deal last month to buy Mandalay Resort Group for $4.8 billion in cash, the source said. That deal still has to be approved by federal and state gambling regulators.

Terms of the possible Harrah’s-Caesars deal were not available. Caesars market value stood at $5 billion Wednesday; the company also has nearly that amount in debt.

Harrah’s, which is heavily into riverboat casinos, has 26 casinos in 13 states under the Harrah’s and Showboat names and has 41,000 employees.

Caesars, which changed its name in January from Park Place Entertainment Corp., currently is the largest casino operator in the world, but would be eclipsed by a Mirage-MGM Grand combination.

Caesars has 27 properties in five countries on four continents, including Caesars Palace and Bally’s Las Vegas, and employs 54,000. The company led the industry with $4.17 billion in 2003 revenues. Mirage revenues totaled $3.91 billion, while Mandalay reported $2.49 billion. Harrah’s had $4.13 billion in revenue last year.

Shares of Caesars rose $2.08, or 14.9 percent, to close at $16 Wednesday on the New York Stock Exchange. Harrah’s shares fell $1, or about 1.9 percent, to close at $50.98.