Rolling The Dice: Harrah's Might Spark Other Buyouts


It looks like Harrah's the world's largest casino company is going private. Late word has the gaming company selling to private equity buyers for almost $17 billion, a $90 per share buyout. On today’s “Street Signs” Erin Burnett spoke with David Katz of CIBC World Markets about the impact of the deal and other companies might be looking for deals of their own.

First some background. Private money has gone on a months-long shopping spree for casino operators which are valued for their cash-generating ability and significant real estate holdings.

Now here's what our guest, David Katz said, "I hesitate to name names but other casino operators such as Penn National Gaming, Boyd Gaming , Pinnacle Entertainment and Isle of Capri are likely considering what's going on around them."

Erin Burnett: Since the M&A talk has been going on for a while, is it too late to get in?

David Katz: "Penn National is one we still would buy. Our present price target is $46 - and it's a good company fundamentally. And they could benefit in one of two ways 1) they could buy cast-off properties from Harrah's or 2) they could be a target. "With Boyd and Pinnacle, they both have consider capital expenditure in the next few years. We have neutral ratings on both."

The Harrah's deal marks the biggest deal to take a public casino company private and ranks as one of the largest leveraged buyouts in history.

An official announcement on the Harrah's deal could come as early as Tuesday.

Analyst Disclosure: BYD, HET, MGM, STN, WYNN, ASCA and AZR are investment banking clients of CIBC.