ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, June 7, 1996 TAG: 9606070053
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
Hilton Hotels Corp. agreed to buy Bally Entertainment Corp. for about $2 billion on Thursday, forming a giant casino business that would stretch from Atlantic City to Australia.
Hilton owns 10 casinos and would gain five more from Bally, including two crucial properties in Atlantic City, N.J., where it had been shut out.
``It is very hard to claim that you're the largest in the world but you missed the second-largest market,'' said Hilton chief executive Stephen Bollenbach. ``Bally is the perfect fit for us.''
The deal would mean Hilton would own almost all of a three-quarter mile length along the Las Vegas strip.
Under the deal, which still requires shareholder and regulator approval, Bally shareholders would receive Hilton stock worth about $29.25 for each of their own shares. That comes to approximately $2 billion. Hilton would also assume or refinance Bally's $1 billion in debt.
Jason Ader, an analyst with Bear Stearns & Co., said he thought the acquisition by Hilton was a ``terrific deal.''
``I see tremendous synergy for the Bally assets combined with the Hilton gaming portfolio,'' he said.
Bally shares climbed $1.50 to $27.621/2 on the New York Stock Exchange, while Hilton fell 75 cents to $113.75.
Arthur M. Goldberg, chairman and chief executive officer of Bally Entertainment, would own about 3 percent of the stock in the new company, becoming Hilton's largest individual shareholder after chairman Barron Hilton.
Goldberg took over Bally in 1990 when it was nearly $1.5 billion in debt. Although he has stopped the bleeding, he said it was clear that the Chicago-based company needed an infusion of capital to maintain its position.
Bally had also attracted the interest of ITT Corp., which owns Caesars World in Atlantic City, a neighbor to Bally's Park Place, but couldn't match Hilton's price.
``I thought the best fit was ITT because of the location in Atlantic City,'' said Joseph Coccimiglio, an analyst who follows the gambling industry for Dean Witter Reynolds.
It wasn't clear Thursday what role Goldberg would have in the new organization, which would be based at Hilton headquarters in Beverly Hills, Calif. He said he would become a director and spend the next few months working to put the deal together by year-end. After that, he said, he could possibly wind up elsewhere in the Hilton organization.
``I've never been one to worry about what particular title'' I have, he said.
Hilton announced in January it was scrapping plans to split into separate hotel and casino companies, and two weeks later hired Bollenbach away from Walt Disney Co., where he had spent only nine months. Bollenbach had experience in the casino industry, having been chief financial officer for the Trump Organization from 1990 to 1992.
Bollenbach said he believes in being the biggest in the business. He said with current restrictions on building new casinos, the way to grow is to buy other companies.
Hilton is also seeking to take over Harrah's Entertainment Inc.'s failed casino project in New Orleans. At the same time, Bollenbach said, Hilton will continue to build its hotel business and is seeking an agreement with Britain's Ladbroke PLC to regain use of the Hilton name abroad.
Hilton owns or operates 240 Hilton and Conrad hotels and resorts worldwide. It has 10 casino facilities in Las Vegas, Reno and Laughlin, Nev.; New Orleans; Canada; Australia; and Turkey. The company has casino projects under development in Kansas City, Mo., Uruguay and Egypt.
Bally's has the Park Place and the Grand in Atlantic City, as well as Bally's Las Vegas, a river boat casino in New Orleans, a dockside casino in Mississippi and plans to build a $420 million Paris-theme resort in Las Vegas. The Bally name will still be used under the acquisition.
After the takeover, the organization will include nearly 800,000 square feet of gambling space; 18,000 hotel rooms in its gambling facilities, and more than 100,000 hotel rooms in total.
LENGTH: Medium: 81 lines ILLUSTRATION: PHOTO: AP. Hilton's purchase would give the company almost allby CNBof a three-quarter mile length along the Las Vegas strip, in
addition to its acquisitions in Atlantic City.