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Buyout Buzzings Have Caesars' Bells Ringing


Inside Wall Street

BUYOUT BUZZINGS HAVE CAESARS' BELLS RINGING

Gaming stocks have been hot so far this year, but Caesars World hasn't participated much in the group's surge. The stock, which traded as high as 40 a share in March, is down to 32. Of late, however, Caesars has been catching renewed attention. The betting is that Caesars is again a buyout target. It was the object of a takeover bid in 1987 by a group led by investor Martin Sosnoff. That was foiled by an aggressive financial restructuring by management.

The buyout speculation began swirling a few weeks ago when ITT, the giant conglomerate, announced it was serious about getting into the profitable casino business. More recently, whispers that informal talks have taken place between ITT and Caesars executives have added fire to the rumor.

`WISH LIST.' Caesars spokesman Jack Leone declined comment. And ITT neither confirms nor denies the speculation. Bob Bowman, an executive vice-president and chief financial officer of ITT Sheraton, would say only that "we are looking at all options and examining the gaming landscape for ourselves." Sheraton already runs its own gaming operations in Australia, Egypt, and St. Martin in the Caribbean. ITT, says Bowman, very much wants to do the same in the U.S. He adds that the company, which has filed for a gaming license in Las Vegas and in Atlantic City, is also seeking one in New Orleans. Bowman wouldn't say whether ITT would purchase individual casinos or buy the owner of a chain of gambling casinos, such as Caesars. The gaming outfit has two casino-hotels in Nevada, including Caesars Palace in Las Vegas, and one in Atlantic City.

"Caesars is on top of ITT's wish list," claims one Nevada money manager, because of its "great franchise and globally known name." The name Caesars, he adds, represents "high level and high-stakes gambling" of the sort that ITT covets for its hotels.

Caesars' properties would fit well with Sheraton's operations, says analyst Jim Murren of C.J. Lawrence. Caesars would be the most attractive to ITT--"if it were to buy a casino-hotel chain," he says.

Some pros believe Caesars is attractive even without a buyout. "It's the cheapest in my universe of gaming stocks," says Oppenheimer analyst Steve Eisenberg, who has just raised his fiscal 1993 estimate to $3.40 to $3.45 a share from his previous $3.30, vs. the $2.73 (after an extraordinary charge) for the year ended July 31. He's impressed with Caesars' retirement of some high-cost debt and its improving slot-machine revenues. Trading at half the market's price-earnings, "we find the stock compelling for value-oriented investors," says Eisenberg, who sees the stock jumping to the mid-40s in a year and to 60 in two.GENE G. MARCIAL


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