Monday, December 24, 2007

Harrah's close to largest casino buyout


Harrah's Entertainment Inc. has tentatively cleared the last remaining regulatory hurdle to the largest casino buyout ever. Harrah's said Monday that the National Indian Gaming Commission has approved the company's $17.7 billion purchase by private equity buyers Apollo Management and Texas Pacific Group, pending final commission review. That conditional approval means Harrah's can go forward with the deal, which is expected to close in early 2008. No further regulatory approval is required. Officials with Harrah's in Las Vegas and the Indian gambling commission in Washington did not immediately respond Monday to messages seeking further comment. Harrah's and the buyers received the go-ahead for the deal last week from the Nevada Gaming Commission, capping a 10-week campaign to obtain approvals from state gambling regulators in New Jersey, Pennsylvania, Louisiana, Iowa, Missouri, Illinois, Indiana and Mississippi. Harrah's, which had nearly $10 billion in revenue last year, operates more than 50 casinos including Caesars and the Imperial Palace in Las Vegas and Bally's in Atlantic City. Indian Gaming Commission approval is needed because Harrah's operates several tribal casinos as well. The company's stock was up 51 cents to $88.84 in Monday trading. The buyout deal calls for Apollo and Texas Pacific to pay $90 per share.

Pershing boosts stake in Target to nearly 10 percent

WASHINGTON (Reuters) - Activist hedge fund Pershing Square Capital raised its stake in Target Corp (TGT.N: Quote, Profile, Research) to nearly 10 percent, a U.S. Securities and Exchange Commission filing said on Monday. Pershing, which recently raised a $2 billion fund to exclusively invest in Target, now holds a 9.97 percent stake in the discount retail chain, up from approximately 9.6 percent in July. Pershing said it has also invested in Target swaps and options, which combined with the stock gives the fund an economic exposure equal to a 12.6 percent stake in the retailer. According to the filing, Pershing said it has met with Target's management and may meet them again to discuss the company's strategy, business, assets, operations, capital structure or its financial condition. Pershing said it has engaged financial advisers and may contact other Target shareholders. Target rose 2.2 percent to $51.81 on the New York Stock Exchange.

Ahead of the Bell: Circuit City (AP)

Analysts said Monday that the next few years are likely to be hard for Circuit City Stores Inc., which plunged following a large third-quarter loss. On Friday, the electronics retailer reported a much larger loss than analysts expected, partly due to weak sales of accessories and warranties, and it forecast a small loss in the fourth quarter. Shares dove 28.7 percent on the day, closing at a four-year low of $4.75. Goldman Sachs analyst Matthew Fassler said Circuit City is opening new stores and taking on more debt. He did not approve of the risks involved in that strategy. "The company is betting that its new units will produce before its existing stores deteriorate to untenable levels, and, moreover, that its problems reflect poor real estate, as opposed to being endemic to the core of the organization," he said. "We view this as unwise." Fassler kept a "Neutral" rating on the stock, and cut his price target to $5.50 per share from $9. He now forecasts losses for Circuit City in 2008 and 2009. Analyst Mike Baker of Deutsche Bank differed, saying real estate is a major problem for Circuit City. He said the company suffers from bad floor plans at its 400 oldest stores, many of which are in unattractive locations. "These lead to weak sales per foot, necessitating a lower cost structure, meaning that Circuit City must sacrifice customer service," he said. "This then leads to share loss." Circuit City is moving its stores to better locations, he said, but that will happen slowly because it must wait for leases to expire. Baker cut his price target to $5 per share from $9.