Park Place purchase of Caesars receives initial state approval

Thursday, Oct. 7, 1999 | 11:38 a.m.

CARSON CITY -- In what is billed as the biggest casino transaction in history, Park Place Entertainment Corp. of Las Vegas gained preliminary state approval Wednesday to buy Caesars World Inc. for $3 billion.

Park Place, which becomes the largest gaming company in the world with this deal, will own or be managing 28 casino properties around the world with this purchase. Harrah's Entertainment is the second-largest U.S. casino company.

Park Place may end up shedding two of its casinos -- the Hilton in Las Vegas and the Hilton in downtown Reno.

After the state Gaming Control Board unanimously recommended approval for the deal, Mark Dodson, executive vice president for Park Place, was asked about reports the Las Vegas Hilton was up for sale. He said, "The Las Vegas Hilton is a very good property. We've been approached, probably in light of the Caesars transaction, by people interested in acquiring it.

"We're not solicting interest and I think the biggest rumor around was Phil Ruffin ... we're not out there trying to sell it," Dodson said. Ruffin owns the Frontier hotel-casino on the Las Vegas Strip.

Dodson said there was an "interested party" who wants to purchase the Hilton in downtown Reno. "But we're not auctioning the property off."

Dodson told the control board Park Place intends to spend some money for improvements at Caesars Palace in Las Vegas. "We're looking at investing in additional suite product." The company is examining whether to move a cafe out to the pool and opening up that area to a high-end baccarat room, he said.

He suggested there might be some improvements at Caesars Tahoe in Northern Nevada.

Dodson also said Park Place is going through a study to see if the Caesars Palace name can be used in other locations by the company. "We're in the process of going through a brand audit to understand what our customers perceive as a true value in the brand before we make decisions on rebranding properties."

"There's international opportunity to reband," especially in South America where the Caesars Palace name is very strong, Dodson said.

Final approval must come from the Nevada Gaming Commission, which meets Oct. 21 in Carson City. Jack Godfrey, a Las Vegas attorney representing Park Place in the transaction, said it hopes to receive approvals this month in New Jersey and Mississippi.

Park Place is purchasing the properties from Starwood Hotels & Resorts Worldwide Inc. The deal includes Caesars Palace, Caesars Atlantic City, Caesars Tahoe, the Glory of Rome riverboat in Harrison County, Ind., The Sheraton Casino & Hotel in Tunica, Miss., management of the slot operations at Dover Downs Racetrack in Delaware and various other joint venture, real estate and management contract interests or licenses for gaming properties in Halifax and Sydney, Nova Scotia; Windsor, Ontario; Manila, Philippines; and Gauteng Province in South Africa.

Dennis Neilander, a member of the control board, said an economist for the agency looked at the deal to make sure Park Place would not have a monopoly. The study showed Park Place will have 21 percent of the business on the Las Vegas Strip; 14 percent in Clark County and 13 percent statewide.

"The economist did an analysis of the market concentration and we didn't find any particular problem," Neilander said.

The U.S. Department of Justice also did not raise any anti-trust concerns, Godfrey told the board.

Not included in the sale by Starwood is the Desert Inn on the Las Vegas Strip, nor the 35 adjacent acres. Sun International Hotels Ltd. is buying the Desert Inn from Starwood.

Dodson told the board there were no personnel changes expected until the deal is complete.

As part of the transaction, Park Place will create a new company called Consolidated Supplies, Services and System, which will be a central purchasing place for slot machines for the gaming conglomerate. David Arrajj, counsel for Park Place, said this new company will be able to buy in volume and receive discounts. It also has tax advantages, he said.