Harrah’s to buy Caesars and create world’s biggest gambling company

HARRAH’S Entertainment Inc is buying Caesars Entertainment Inc for about $5.2 billion in cash and stock in a deal that would create the largest gambling company in the world.

The deal announced yesterday eclipses last month’s high-profile MGM Mirage merger with Mandalay Resort Group while setting up a battle for customers on the lucrative Las Vegas Strip. A source familiar with the deal, speaking on condition of anonymity, said Harrah’s and Caesars began negotiating after MGM Mirage completed its deal last month to buy Mandalay for $4.8 billion in cash.

Both deals will face intense scrutiny from federal and state gambling regulators.

Under terms of the deal, Harrah’s will pay $1.8 billion in cash and exchange about $3.4 billion in Harrah’s stock for all of the shares of its Las Vegas-based rival. That values Caesars’ common stock at about $16.96 a share, a 6% premium over its closing price of $16 on Wednesday.

Harrah’s also will assume about $4.2 billion in Caesars Entertainment debt in the deal.

The deal has been approved by the boards of both companies but is subject to approval by shareholders and regulators.

Harrah’s Entertainment, which operates heavily with riverboat casinos, has 28 casinos in 13 states under the Harrah’s and Showboat names. It has about 41,000 employees.

Caesars has 28 properties worldwide.