Eldorado Resorts has completed its previously announced acquisition of Tropicana Entertainment in a transaction that further increases the company’s scale. It is expected to be immediately accretive to its free cash flow and diluted earnings per share, inclusive of identified expected cost synergies of approximately $40m to be realized in Eldorado’s first year of operation of Tropicana.
The combination, said the firm, creates a premier, diversified regional gaming platform with combined annual revenue of more than $2.7bn and combined adjusted EBITDA of approximately $697m in each case for the 12 months ended June 30, 2018 and giving effect to the acquisition of Grand Victoria Casino and the previously announced dispositions of Presque Isle Downs and Lady Luck Nemacolin.
The acquisition of Tropicana brings to Eldorado the operating assets of seven casinos in six states, including Nevada (the Tropicana Laughlin Hotel and Casino and the MontBleu Casino Resort & Spa in South Lake Tahoe); Indiana (Tropicana Evansville); Louisiana (Belle of Baton Rouge Casino & Hotel), Mississippi (Trop Casino Greenville); Missouri (Lumière Place); and New Jersey (Tropicana Casino and Resort, Atlantic City).
These properties collectively include approximately 7,900 slot machines, 265 table games and approximately 5,400 hotel rooms, along with a number of dining, retail and entertainment amenities. As a result, Eldorado’s expanded property portfolio now features more than 27,500 slot machines and VLTs, more than 800 table games, over 12,500 hotel rooms and nearly 20,000 team members.
Gary Carano, chairman and CEO, commented: “Our acquisition of Tropicana marks a continuation of Eldorado’s successful history of rapid growth through strategic, accretive acquisitions. Through this combination, we have significantly expanded the scale of our gaming operations, further diversified our geographic reach into new markets – some of which have already adopted sports wagering legislation — and minimized market-specific risk.
“We continue to focus on enhancing shareholder value through strategic transactions, return-focused property enhancements and opportunistic partnerships with third parties – including the Tropicana transaction, the Grand Victoria acquisition and our recent agreements with The Cordish Companies and William Hill PLC.
“We intend to reduce the initial purchase price multiple of the Tropicana transaction as we implement a range of operating disciplines designed to enhance margins by further improving customer service and the customer experience while focusing on promotion and other spending in all areas of the newly-acquired properties. We look forward to welcoming Tropicana’s team members to the Eldorado Resorts family.”
Tom Reeg, president and CFO of Eldorado, added: “With the acquisition of seven Tropicana properties, Eldorado enters two new gaming jurisdictions and adds financial and geographic diversity to our operating base. We have identified $40m of synergies that we expect to realize over the next year. We believe the financing structure for the transaction, which includes a master lease of real estate acquired by GLPI, allows us to maintain financial flexibility for leverage reduction and continued transactional growth as we continue to own the majority of the underlying real estate across our remaining property portfolio.”
