X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

LAS VEGAS-Despite published reports, it is unlikely that Penn National Gaming Inc. will make a competing offer for Harrah’s Entertainment Inc., according to JP Morgan gaming analyst Harry Curtis. The deal “doesn’t make sense” and the “sources” propagating the news stories are most likely board members and major shareholders “doing their jobs, which is seeking a higher price,” he wrote in a client note this morning.

In early October, Harrah’s received an $81 per share bid from private equity firms Apollo Management and Texas Pacific Group that is still on the table. The overall deal is valued at $15.05 billion, which is a 22% premium over the stock’s closing price the day before the offer was made public.

The competing bid reportedly may come from Penn National and hedge fund D.E. Shaw, with financial backing from Lehman Bros. and Wachovia. Earlier this month, D.E. Shaw partnered with Ian Bruce Eichner to make a buyout offer for Riviera Holdings Corp., owner of the Riviera Hotel & Casino on the Las Vegas Strip and another in Colorado. Curtis says the Penn National reports are merely the results of insiders fulfilling their fiduciary responsibility and that a higher offer doesn’t appear to be a sound one for Penn.

“The bottom line is that an offer by [Penn] to acquire [Harrah's] at 10x-10.5x 2008 EBITDA just does not make sense, in our view, particularly when numerous dilutive asset sales at multiples less than 10x would be required,” Curtis wrote. “Additionally, an acquisition of HET would be a wide departure from the philosophy that has made PENN successful in the first place, which is to pursue strategic and accretive acquisitions at a disciplined and measured pace.”

Shares of Penn stood at $37.40 in afternoon trading on the Nasdaq, off $0.76 cents, or 2%. Harrah’s shares, traded on the NYSE, stood at $78.81, up $0.35, or .45%, on the day.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. NET LEASE 2020Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.