NEW YORK (CNNfn) - Riverboat gambling company Players International Inc. said Monday it will accept a $425 million buyout bid from Harrah's Entertainment, dropping a rival merger plan with slot-machine operator Jackpot Enterprises Inc.
Atlantic City, N.J.-based Players (PLAY), which runs riverboat casinos in Illinois, Louisiana and Missouri, said its board decided Sunday that Harrah's (HET) $8.50 per share cash offer is superior to the $8.25 cash-and-stock bid made by Jackpot (J). Players and Jackpot signed their deal in February.
Shares of Players were rallying on the news Monday, trading up 1-11/32 at 7-29/32 by mid-afternoon in New York.
"We are pleased to have received a superior proposal from Harrah's, a recognized leader in the gaming industry, and have accepted the offer in accordance with the best interests of our shareholders and employees," Players CEO John Groom said.
Memphis-Tenn.-based Harrah's, which operates casinos in Las Vegas and Atlantic City, will pay about $275 million cash and assume $150 million of debt for Players. Harrah's also will put up the money for Players' $13.5 million breakup fee with Jackpot.
Under the original deal, Jackpot would have paid $6.75 in cash and $1.50 in Jackpot common stock for Players, contingent on obtaining financing to complete the bid. The Harrah's bid "does not contain a financing contingency," Players said.
Players and Harrah's haven't yet signed a definitive merger agreement. The deal also is subject to approval by regulators and Players' shareholders. The buyout, if approved, should close by the end of the year, the companies said.
Jackpot said it has three days to match or better Harrah's bid, but wouldn't comment further regarding Players' obligation should Jackpot produce a second bid comparable to Harrah's.
"The board of directors is presently reviewing their options in order to determine the company's response," Jackpot President and CEO Don Kornstein said through a company spokesperson.
Players' chief financial officer, Raymond Spear, said if Players receives another bid from Jackpot, "We'd have to evaluate whatever offer they would put forth" and seek the advice of the company's financial advisors and investment bankers involved in the deal.
Harrah's stock was trading up 9/16 at 22-7/16, while shares in Jackpot Enterprises also were higher by 9/16 at 8-1/16 in mid-afternoon trade.