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Tuesday, July 16, 2019  Spokane, Washington  Est. May 19, 1883
News >  Business

High rollers: Eldorado buys Caesars in deal valued at $17B

In this Jan. 12, 2015, file photo, a man takes pictures of Caesars Palace hotel and casino, in Las Vegas. Eldorado Resorts will buy Caesars in a cash-and-stock deal valued at $17.3 billion, creating a casino giant. The acquisition Monday, June 24, 2019, puts about 60 casinos and resorts in 16 states under a single name, one of the biggest gambling and entertainment ventures in the United States. (John Locher / AP)
In this Jan. 12, 2015, file photo, a man takes pictures of Caesars Palace hotel and casino, in Las Vegas. Eldorado Resorts will buy Caesars in a cash-and-stock deal valued at $17.3 billion, creating a casino giant. The acquisition Monday, June 24, 2019, puts about 60 casinos and resorts in 16 states under a single name, one of the biggest gambling and entertainment ventures in the United States. (John Locher / AP)
By Regina Garcia Cano Associated Press

A casino juggernaut was formed Monday when Eldorado Resorts announced it is buying Caesars in a cash-and-stock deal valued at $17.3 billion.

The acquisition will put about 60 casino-resorts in 16 states under a single name, Caesars, creating the largest gambling operator in the United States. The deal – following pressure from activist investor Carl Icahn – is targeted to close in the first half of 2020 if approved by gambling regulators and shareholders.

It would open the doors of the Las Vegas Strip market to Eldorado.

“We are incredibly excited. This is an iconic brand,” Eldorado CEO Tom Reeg said referring to Caesars Entertainment during a conference call. “It’s really a level of property and brand that we have not had the great fortune to control and now we will.”

Eldorado will pay $8.40 per share in cash and 0.0899 shares of Eldorado stock for each Caesars share, or $12.75 per share. The transaction values Caesars at about $8.6 billion, and Eldorado will pick up about $8.8 billion of the casino’s debt.

Shareholders of Eldorado Resorts Inc. will hold about 51% of the company’s outstanding stock, with Caesars Entertainment shareholders holding the remaining and 49%.

The company will be led by Reeg, along with Eldorado Chairman Gary Carano. It will be headquartered in Reno, Nevada, where Eldorado is based, and have a significant corporate presence in Las Vegas, where Caesars is based.

The deal was months in the making. Icahn earlier this year revealed he had amassed an enormous stake in Caesars Entertainment and pushed for fundamental changes at the company, including board representation and a say in the replacement of the then-CEO. He argued that the company’s stock was undervalued and the best way to boost it would be to sell the company.

Caesars Entertainment Corp., which operates more than 30 casinos in the U.S., emerged from bankruptcy protection in late 2017, but it’s been struggling since.

Icahn in April appointed Caesars Entertainment’s current CEO, Tony Rodio, who had the same role at the billionaire’s Tropicana Entertainment, which was sold to Eldorado in 2018. He also got to pick board members.

“While I criticized the Caesars Board when I took a major position several months ago, I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction,” Icahn said in a prepared statement Monday. “As a combined company, Caesars and Eldorado will be America’s preeminent gaming company.”

The bankruptcy reorganization led to the creation of the real estate investment trust VICI Properties Inc. It owns the buildings and land of more than 20 casino-resorts, including Caesars Palace on the Las Vegas Strip, and leases the operations back to casino operators.

Eldorado said Monday that it also reached an agreement with VICI Properties Inc. in which VICI will acquire the real estate associated with Harrah’s Resort Atlantic City, Harrah’s Laughlin Hotel and Casino located about 100 miles south of Las Vegas, and Harrah’s New Orleans Hotel and Casino for approximately $1.8 billion.

Caesars operates three casinos in Atlantic City and Eldorado operates one.

Other terms of the deal include VICI being given right of first refusals for whole asset sale or sale-leaseback transactions on two Las Vegas Strip properties and the Horseshoe Casino Baltimore.

Reeg told analysts and investors the company expects to sell some properties that may allow it to avoid federal anti-trust issues. It is also evaluating whether to sell properties on the Strip.

“As I sit here today, I tell you, I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” he said. “So, I would expect that we would be a seller of a Strip asset, but that decision has not been made.”

It is uncertain whether the new company will venture into Japan, where major casino operators have set their sights after the nation legalized casino gambling last year. Reeg said “no firm decisions” have been made on the international market, but the opportunity would have to be “stupendous for us to be running in that direction.”

Caesars’ stock jumped 16% Monday, while shares of Eldorado fell 10%.

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