Harrah's accepts $17.1 billion private equity bid

"We don't think today's deal is the last involving private equity and gaming and see more of it and balance sheet recaps as big themes heading into 2007," Bear Stearns analyst Joe Greff said in a research note.

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 Inc. (PNK.N).

Loveman said the announced deal does not trigger any asset sales and none are planned at this time.

He also said Harrah's plans to move forward with long-standing plans to redevelop its holdings on the Las Vegas Strip and in Atlantic City, but said there is no firm time frame for when it will announce final schemes.

Loveman's strategy for Harrah's has focused on leveraging the company's massive customer database, called Total Rewards, to cross-market its nationwide chain of around 39 casinos, which includes brands like Horseshoe, Harrah's and Caesars.

The company also expects to complete before year-end its acquisition of British casino operator London Clubs International Plc (LCI.L) and is developing projects in the Bahamas, Spain and Solvenia.

The two sides said they expect to close the deal within a year, and the buyers will begin paying shareholders' interest expenses if the closing is delayed past March 1, 2008.

"They've pretty much put their money where their mouth is and said they can get the deal done in 14 months, and they are willing to pay shareholders if it takes longer than that," LaFleur said.

A Harrah's spokesman said the $17.1 billion equity value of the deal was based on an update of the outstanding shares it had reported at the end of September, which initially yielded a $16.7 billion value.

The deal would rank in the top 10 private equity buyouts this year, which include the $21 billion buyout of HCA Inc. and a $20 billion deal for Equity Office Properties Trust (EOP.N).

(Additional reporting by Bill Rigby in New York)