The board of the world's largest casino operator, Harrah's Entertainment, has accepted a $17.1 billion buyout bid from private equity groups Apollo Management and Texas Pacific Group.
The $90-per-share deal announced yesterday is still subject to shareholder approval and a regulatory process that could take a year or more.
It marks an end to more than two months of talks that followed a previous $81-a-share offer from Apollo and TPG, although Harrah's said it would seek higher bids over the next 25 days.
The private equity firms, which are paying a 35 per cent premium to the price of Harrah's shares at the end of September just before their first offer was announced, will also assume $10.7 billion in debt, Harrah's said.
"It's a fair price for Harrah's shareholders. The 25 days allows them to say this is what we came up with on our own, now we are opening it up to others," said Robert LaFleur at Susquehanna Financial Group.
Shares of Las Vegas-based Harrah's, which were halted before the deal was announced, rose 12 cents to $82.30 on the New York Stock Exchange before trading was stopped.
The stock has not responded strongly to reports of higher bids due to concerns about the amount of time it will take to complete the deal due to casino licensing requirements, experts have said.
Across the market, many executives have cooperated with moves to take their companies private, lured by big payouts from the change of control and the prospect of escaping the pressure they face when companies are publicly traded.
The casino sector has been particularly rife with deals as private equity firms seek out new areas to invest hundreds of billions of dollars in new funds.
Station Casinos announced plans on December 4th for a $4.7 billion management-led buyout. Smaller casino operator Penn National Gaming had also been considering a bid for Harrah's, according to sources.
LaFleur said the new Harrah's owners were likely to sell off some non-core assets, such as the Rio casino off the Las Vegas Strip, which would be more valuable to operators like Penn or Pinnacle Entertainment.