Harrah's to Buy Showboat for $1.1 Billion

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MEMPHIS, Tenn. -- Harrah's Entertainment here said it signed an agreement to acquire Showboat Inc. in a deal valued at $1.1 billion. The purchase would create the world's largest gaming company and, Harrah's officials said, would strengthen the company's presence in Atlantic City, N.J., and the Midwest.

Harrah's will buy Showboat for $30.75 per share in an all-cash transaction valued at $519 million, and will assume $635 million in Showboat debt. J. Kell Houssels III, Showboat's president and chief executive officer, will join Harrah's as the president of its new Showboat division and as a member of its board of directors.

With the acquisition, Harrah's will have 20 casinos in 15 markets nationwide. The company currently operates casino properties in Las Vegas, Reno, Lake Tahoe, and Laughlin, Nev.; Atlantic City, N.J.; North Kansas City and St. Louis, Mo.; Joliet, Ill.; Tunica and Vicksburg, Miss.; Shreveport, La.; Cherokee, N.C.; Bow, Wash., and Phoenix.

Showboat owns and operates casinos in Atlantic City and Las Vegas. In addition, Showboat owns and is the largest single shareholder of the recently opened Star City casino in Sydney, Australia, and also manages and owns 55% of the Showboat Mardi Gras Casino in East Chicago, Ind., which debuted five months ago.

The decision already has been made to keep the Showboat name on the Atlantic City casino, a Harrah's spokesman said, but nothing definite has been decided about the rest of the Showboat properties. Company officials, however, are reviewing how the Showboat casino in Las Vegas fits in with the rest of Harrah's portfolio, he said. That property draws mostly a local market and is located away from the Strip, the spokesman said.

In addition, Harrah's recently sold the management contract for its only international gaming facility, Sky City, in Auckland, New Zealand, citing a desire to focus on North America.

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