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New Mirage bidders seen
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February 25, 2000: 3:51 p.m. ET
Harrah's, Park Place could challenge MGM Grand's $3.4B offer
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NEW YORK (CNNfn) - At least one other big casino operator is weighing a bid for Mirage Resorts Inc., just days after billionaire investor Kirk Kerkorian's MGM Grand Inc. offered to buy the Las Vegas casino chain for about $3.4 billion.
 Harrah's Entertainment Inc. (HET: Research, Estimates) confirmed its board is mulling making a competing bid for Mirage, whose board is expected to meet within the next week to consider MGM's tender offer.
"Yes, we are considering it," said Jan Jones, a spokeswoman for Harrah's. "Whether we'll get involved, I don't know. We think consolidation is the future of the industry."
Another potential suitor could also emerge in the form of Park Place Entertainment Corp. (PPE: Research, Estimates), the world's largest gambling chain. The Wall Street Journal reported Friday that company's board also is considering a bid. The company did not return several calls seeking comment.
Jones emphasized that Harrah's is doing nothing more than reviewing a potential offer and nothing is imminent. But some analysts said an offer could come as soon as Monday.
"I wouldn't be surprised if we are talking about an offer from Harrah's on Monday," said Jason Ader, a casino analyst with Bear Stearns. "The real question is, who can get the most synergies out of Mirage's business? I still believe MGM is the best match."
MGM (MGM: Research, Estimates) offered Tuesday to purchase Mirage (MIR: Research, Estimates) in a cash or cash and stock bid valued at $17 per share, a deal that would create the pre-eminent hotel and gambling chain along the Las Vegas Strip. MGM's tender offer expires March 8.
Mirage's stock, which has been mired in a deep slump in recent months, initially jumped to the $14 per share level on the offer, but didn't climb much higher out of concern that the company's board would reject MGM's advance.
Speculation of a counter bid sent Mirage shares up 7/8 to 15-1/16 in late afternoon trading Friday, while MGM shares lost 1-5/8 to 39-13/16.
Some analysts had questioned whether either Harrah's or Park Place had the financial wherewithal to enter a bidding war with MGM since both were still digesting other acquisitions. But CS First Boston analyst David Anders said it was only natural the two would still consider challenging MGM.
"Harrah's, in particular, is a natural fit for Mirage," he said. "I can't imagine them want MGM to just walk in there and take Mirage without a fight."
But Harrah's is still attempting to complete the acquisition of riverboat casino operator Players International, somewhat limiting its financial flexibility. Still, the company has been willing to bid up for assets before.
"MGM is very deliberate," Ader said. "They are not going to do a deal that isn't immediately accretive to earnings per share. Harrah's, on the other hand, has done deals that aren't accretive."
Still, Park Place has been acquisitive since being spun off from Hilton Hotels (HLT: Research, Estimates) in 1998. But Park Place's stock has struggled as well and currently trades lower than Mirage, complicating a potential offer.
The true breaking point for any bid will likely come at the point where cost savings no longer outweigh the costs, analysts said.
For example, MGM (MGG: Research, Estimates) believes it could save more than $150 million, according to the Journal, while Park Place executives estimated their savings at about $80 million. Ader said MGM's bid likely won't top $23 to $25 per share.
By mid-afternoon, Harrah's shares were up 3/16 to 20-1/8 while Park Place climbed 1/2 to 11-1/4. 
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