In the culmination of a lengthy negotiating process, Eldorado Resorts will purchase Caesars Entertainment to complete a casino industry $17.3 billion mega-merger. The new company will become the world’s biggest casino company, while also providing access to sports-betting and online gaming platforms.
The Reno-based Eldorado Resorts is set to pay $8.40 in cash per share, along with 0.0899 shares of Eldorado stock, for a total price of $12.75 per share of Caesars Entertainment’s outstanding stock. Those figures create an approximate value of $8.6 billion to acquire Caesars, while Eldorado will also absorb $8.8 billion of Caesars’ debt.
Eldorado currently operates 26 casinos in 12 states, including several under the Isle Casino, Isle of Capri Casino, and Tropicana Casino brands. The company’s casino portfolio will grow to over 60 with the addition of Caesars properties, which include the Bally’s, Caesars, Harrah’s, and Horseshoe brands.
After thriving in several regions outside of Las Vegas, Eldorado’s takeover secures the company access to the Strip, where Caesars operates Bally’s, Caesars Palace, Harrah’s, The Cromwell, Flamingo, The Linq, Paris, and Planet Hollywood.
The new company – which will retain the Caesars name to capitalize on global brand awareness – will become the world’s largest casino operator.
The merger is scheduled to close in the first half of 2020, pending approval from Nevada gaming regulators and the companies’ respective shareholders.
In a statement issued to investors Tom Reeg – the chief executive officer of Eldorado who will assume control of the newly created entity – outlined his company’s motivations for pursuing the massive merger:
“Eldorado’s combination with Caesars will create the largest owner and operator of U.S. gaming assets and is a strategically, financially and operationally compelling opportunity that brings immediate and long-term value to stakeholders of both companies. Together, we will have an extremely powerful suite of iconic gaming and entertainment brands, as well as valuable strategic alliances with industry leaders in sports betting and online gaming.
The combined entity will serve customers in essentially every major U.S. gaming market and will marry best-of-breed practices from both entities to ensure high levels of customer satisfaction and significant shareholder returns.”
Jim Hunt – who serves as chairman of Caesars – provided the following comments:
“This announcement is the culmination of a thorough evaluation by the Caesars Board of Directors. The Board unanimously concluded that the combination of these two companies creating an even stronger entity is a decision for our shareholders’ consideration and vote for immediate and ongoing value.”
The genesis of an Eldorado / Caesars merger began in March at the behest of billionaire investor Carl Icahn.
The 83-year old Icahn steadily increased his ownership of Caesars stock through a series of multimillion-dollar acquisitions that saw his stake climb from 9.8 percent to 28.5 percent.
Icahn used his increased control to compel the board of directors to appoint three allies, before ultimately installing Tony Rodio as chief executive officer. As he consolidated power, Icahn pressured the Caesars board to sell the company and bolster stock which he deemed to be undervalued.
In a separate statement, Icahn praised the Caesars board of directors for agreeing to the sale:
“We are pleased by today’s announcement that Eldorado Resorts, Inc. will merge with Caesars Entertainment. This merger is the quintessential example of how an activist shareholder, working collaboratively with the Board, can greatly enhance value for all stockholders.
As a combined company, Caesars and Eldorado will be America’s preeminent gaming company. It is rare that you see a merger where because of the great synergies ‘one plus one equals five.’ I look forward to seeing our investment prosper.”
Caesars emerged from Chapter 11 bankruptcy proceedings in 2017 after falling into debt to the tune of $25 billion.