Harrah’s buying Harveys in first big gaming merger of 2001

Tuesday, April 24, 2001 | 3:19 a.m.

In the first big gaming deal of 2001, Harrah's Entertainment Inc. of Las Vegas announced plans Tuesday afternoon to acquire Harveys Casino Resorts of Lake Tahoe for $625 million.

The deal will increase Harrah's market share in Northern Nevada, giving it one Reno casino and three Lake Tahoe resorts. But, perhaps more importantly, it will give Harrah's casinos in Council Bluffs, Iowa, and Central City, Colo., both new markets for the Las Vegas gaming operator.

The $625 million purchase price includes assumed debt. Harrah's said it will take on additional debt to finance the cash deal.

Harrah's expects the deal to close during the third quarter, assuming regulatory approvals can be obtained. Once complete, Harrah's would have 25 casinos in 12 states.

"The Harveys properties are an excellent complement to our existing geographic network of casino locations and will allow us to further expand the revenue and earnings capabilities of our industry-leading customer-loyalty program, Total Rewards," said Phil Satre, chairman and chief executive of Harrah's.

Harveys, a privately held company, is controlled by Colony Capital LLC of Los Angeles. In its announcement this afternoon, Harrah's said it will not assume Colony's agreement to purchase Resorts Casino Hotel in Atlantic City, which Colony is acquiring from Sun International for $140 million.

The acquisition announcement comes three months after Harveys' deal to acquire Pinnacle Entertainment Inc. of California fell through. Harveys was to have paid $1.3 billion for Pinnacle, an operator of casinos in Mississippi, Louisiana, Indiana and Nevada, but that deal fell through after Harveys had difficulty finding financing to complete the transaction.

Harveys recorded $110 million in cash flow over the 12 months ending Feb. 28, 2001, Harrah's said.

News of the acquisition came shortly after the stock market closed Tuesday.