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The private equity market's appetite seems insatiable. Now Harrah's (NYSE: HET)? How far can the private equity market really stretch? Do we all really believe the same old arguments that "a deal would allow management to operate outside the minute-to-minute scrutiny of the financial markets" and "place bets on its capital investments without facing rebuke from shareholders"(WSJ 10/2/06)(paid subscription to access). Has the public market gotten so inefficient that a $12 billion market cap company that is trading at a 36 times P/E and being followed by every major institutional investor in the world is just too "short sighted"?

While the terms of a deal have not been announced, it will be interesting to see if the multiples are higher than Harrah's paid just two years ago for Caesars. The true question is are we betting on Black or is this truly a case of Craps.

Category(s): Valuation Thoughts
Posted by Brett Suchor at 03:12 PM | Permalink | Comments (0) | TrackBacks (0)