Merger clears key hurdle

Thursday, June 9, 2005 | 10:57 a.m.

The Federal Trade Commission Wednesday afternoon voted unanimously to allow Harrah's Entertainment Inc.'s acquisition of Caesars Entertainment Inc. to proceed, paving the way for the creation of the world's largest casino company.

In a 5-0 vote, the FTC said it closed its investigation of the proposed buyout and did not impose any restrictions on the transaction.

The deal now faces scrutiny from Nevada regulators. The state Gaming Control Board and Nevada Gaming Commission are scheduled to vote on the transaction during back-to-back meetings Friday. If Nevada regulators OK the deal, Harrah's expects to consummate the purchase on Monday.

In a statement issued today, the agency said it looked at the south Lake Tahoe market in particular and determined that the acquisition wouldn't likely harm competition there.

In advance of the deal, Caesars is selling its South Lake Tahoe casino to an affiliate of Columbia Sussex Corp. The FTC also closed an investigation on that transaction today, saying no enforcement action was needed.

After the Caesars Tahoe purchase, expected to close by the end of June, Columbia Sussex would own two casinos in South Lake Tahoe and become one of only two major casino operators in the resort town along with Harrah's, which owns three casinos in South Lake Tahoe.

FTC approval was the key hurdle to the deal, which is expected to be approved by Nevada regulators, analysts said.

The transaction would create a gaming behemoth, with Harrah's owning or operating more than 40 casinos mostly in the United States. The total also includes the Casino Windsor in Ontario, Canada and another in Uruguay.

The combined company would have more than 95,000 employees and more than 40,000 hotel rooms.

Analysts were initially skeptical that the transaction would pass muster with federal antitrust officials because so many of the companies' casinos overlapped in smaller, regional gambling markets. Those concerns were largely addressed when both companies announced the sale of several casinos over the past several months, including Caesars Tahoe and the Atlantic City Hilton, they said.