Harrah's ends Singapore bid

October 07, 2006|By BLOOMBERG NEWS

Harrah's Entertainment Inc., the world's biggest casino-operator by sales, and partner Keppel Land Ltd. have scrapped a joint proposal to build and operate Singapore's second casino-resort, leaving three bidders for the project.

"We determined it would not be possible to deliver a development on the scale we envisioned for Sentosa island while meeting our objectives for this project," the companies said in a joint statement yesterday.

Harrah's, which received a $15.1 billion takeover offer from Apollo Management and Texas Pacific Group on Monday, was competing with Kerzner International Ltd., owner of the Atlantis resort in the Bahamas, Malaysia's Genting Berhad and Eighth Wonder in Las Vegas to develop the second casino in Singapore, which wants to double its tourist arrivals to 17 million by 2015.

The first site, located in the city's downtown, was awarded in May to Las Vegas Sands Corp., the world's biggest casino-operator by market value, which beat three rival bids, including one from Harrah's.

The second casino-resort site is on the resort island of Sentosa, which Merrill Lynch & Co. estimated would draw about $2 billion in investments. Las Vegas Sands has committed to more than $3 billion in investments in Singapore.

Las Vegas-based Harrah's, which owns Caesars Palace in the city, is reviewing the $81-a-share offer from Apollo Management and Texas Pacific. Earlier this week, the company said it was reviewing its "options" for the proposal in Singapore.

"Harrah's remains committed to development in Asia," the statement said.

Harrah's shares added 16 cents to close at $76.41 yesterday.

Harrah's operates or is opening casinos in 13 states, Spain and Slovenia. The company's second-quarter profit rose 22 percent after last year's purchase of Caesars Entertainment attracted more gamblers to its Las Vegas properties.

Singapore lifted its ban on casinos a year ago after its share of the Asia-Pacific tourism market dropped. Tourists are also spending fewer days in the city-state, with stays averaging three days from four in 1991, Prime Minister Lee Hsien Loong has said. Tourists are staying an average of four days in Hong Kong, five in London and almost a week in New York.

The ability to draw tourists will be the key criteria in the government's decision on the license, making up 45 percent of the consideration, the city-state's tourism board said in April. Architectural design makes up 25 percent, while investment accounts for 20 percent. The strength of the group and its partners makes up the remaining 10 percent.

Keppel Land is Singapore's third-largest developer by assets. It's about 14 percent owned by Temasek Holdings, a state-owned investment company.

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