GAMBLING INDUSTRY Harrah's agrees to buy Caesars Entertainment

The deal follows another high-profile merger on the Strip.
LAS VEGAS (AP) -- In a deal that would create the world's largest gambling company, Harrah's Entertainment Inc. has agreed to buy Caesars Entertainment Inc. for more than $5 billion in cash and stock, according to a person familiar with the negotiations.
The agreement is a big surprise for the gambling industry. It eclipses last month's high-profile MGM Mirage merger with Mandalay Resort Group and sets up a key battle for customers on the lucrative Las Vegas Strip.
The boards of the two Las Vegas-based companies agreed in principle to the deal Wednesday, but issues remain unresolved, the source told The Associated Press.
Harrah's also will assume about $4 billion in Caesars Entertainment debt. The companies were expected to announce the agreement today.
Executives with both companies did not return several calls late Wednesday.
The source said Harrah's and Caesars began negotiating after MGM Mirage completed a deal last month to buy Mandalay for $4.8 billion in cash. That deal -- plus the newer, larger combination -- will face intense scrutiny from federal and state gambling regulators.
Company backgrounds
Harrah's Entertainment, which operates heavily with riverboat casinos, has 26 casinos in 13 states under the Harrah's and Showboat names. It has about 41,000 employees.
Harrah's recently completed its $1.45 billion merger with Horseshoe Gaming Holding Corp. The Horseshoe casinos are in Bossier City, La., Tunica, Miss., and Hammond, Ind. The Horseshoe merger made Harrah's -- for the time being -- the largest casino company in the world.
Caesars, which changed its name in January from Park Place Entertainment Corp., had been the world's largest casino operator before the Horseshoe deal was completed. An MGM Mirage-Mandalay combination would surpass either of the individual companies.
With 27 properties in five countries on four continents, including Caesars Palace and Bally's Las Vegas, and 54,000 employees, Caesars led the industry with $4.17 billion in 2003 revenue, ahead of Harrah's $4.13 billion.