NEW YORK – Harrah's Entertainment Inc. (HET) is near a deal to buy rival Caesars Entertainment Inc. (CZR), aiming to create a dominant U.S. gambling concern, a source close to the situation said Wednesday.
The talks are at a sensitive stage, but the source said the chances of the deal being struck in the next day or two were very high and that there were no apparent stumbling blocks. Caesars currently has a market value of about $4.5 billion in addition to another $4.5 billion in long-term debt.
The negotiations, if successful, would create the world's largest gambling company with $8.8 billion in annual revenue and a sizable presence in nearly every major legalized gambling market around the country.
It also would offer a sound rejoinder to rival MGM Mirage (MGG), which last month agreed to acquire Mandalay Resort Group (MBG) for $4.8 billion in an effort to create a dominant casino company on the Las Vegas strip (search).
Shares of Caesars jumped 17 percent Wednesday morning on word of the talks.
Caesars shares climbed $2.33, or 16.7 percent, to $16.25 in trading on the New York Stock Exchange (search). The company had a market capitalization of about $4.3 billion as of Tuesday. Harrah's shares fell $1.11, or 2.1 percent, to $50.87.
Unlike MGM, Harrah's does not boast a sizable presence in Las Vegas -- a problem Caesars, which also owns Bally's, would help cure. The combined company would also boast a sizable regional presence across the country, though it would likely have to make some divestitures to win regulatory approval.