Park Place to Buy Caesars Casino Chain

Park Place Entertainment Corp., the world’s largest casino operator, said Tuesday that it agreed to buy the Caesars World casino chain from Starwood Hotels & Resorts Worldwide Inc. for $3 billion in cash to expand in Las Vegas and Atlantic City, N.J.

Caesars is the sixth-largest U.S. casino chain. Park Place, spun off from Hilton Hotels Corp. in December, owns the Hilton, Bally’s and Grand casino chains.

The purchase would give Park Place a well-known brand and two of the most lucrative casinos in Las Vegas and Atlantic City, the leading U.S. gambling markets. Park Place Chief Executive Arthur Goldberg also plans to boost profit by slashing costs, and he told analysts he will shave about $50 million from Caesars’ expenses.

White Plains, N.Y.-based Starwood sold Caesars to focus on its hotel business, which includes the Westin and Sheraton chains, Chairman and Chief Executive Barry Sternlicht said.

Starwood took control of Caesars and the other casinos when it bought ITT Corp. in February 1998 for $14.6 billion. It said two weeks ago that it was in talks to sell the casinos, and analysts considered Park Place the leading candidate.

The Caesars casinos had sales last year of $1.3 billion. They include Caesars Palace Las Vegas; Caesars Atlantic City; the Caesars casino in Lake Tahoe, Nev.; the Sheraton Casino & Hotel in Tunica, Miss.; and the Glory of Rome riverboat casino near Evansville, Ind. Caesars also manages casinos in Canada, Spain and South Africa. The sale would not include the Desert Inn casino in Las Vegas.

Starwood said the volatility of high-stakes gaming and the capital requirements were among the reasons for the sale. The hotel company would use the proceeds to pay down debt and reduce financing costs.

The deal was approved by both company boards and is expected to close in the fourth quarter.

In New York Stock Exchange trading, Park Place rose $2.25 to close at $11.38 and Starwood fell 69 cents to close at $34.31.