Casino entertainment firm Eldorado Resorts has secured a cash and stock deal with Caesars Entertainment Corp, which will see its peer sold for $8.7bn. The transaction, which is set to be inclusive of Caesar’s assumed debt, is valued at a figure close to $18bn.
The news follows on from February reports that ten-per cent shareholder Carl Icahn pushed for Caesars to consider selling the company, which subsequently led to an immediate uplift on Caesars stock, causing it to rise six per cent.
The deal was formally announced today, and will see Eldorado acquire all of the outstanding shares of Caesars for a total value of $12.75 per share, consisting of $8.40 per share in cash consideration and 0.0899 shares of Eldorado common stock for each Caesars share of common stock.
Tom Reeg, Chief Executive Officer of Eldorado, commented: “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.
“Eldorado’s history of completing successful, value-enhancing transactions has focused on prioritizing operating discipline with the goal of delivering best-in-class gaming and entertainment experiences and amenities to customers, unlocking the long-term value of acquired companies and assets through effective financial management, and completing return-focused investments in our properties that elevate the guest experience as well as our competitive position and overall returns.
“We could not be more excited about the future as we bring together two industry leaders that will generate significant opportunities for our employees, customers, partners and shareholders.”
Giving effect to the transaction, Eldorado and Caesars shareholders will hold approximately 51% and 49% of the combined company’s outstanding shares, respectively.
Eldorado shares have jumped 17 per cent over the last twelve months, which is in complete contrast to the 12 per cent drop in Caesars’ stock.
The merger of the two firms would put them in a steady position to act as a major contender against larger industry players such as Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International.
Jim Hunt, Chairman of Caesars, commented on the merger: “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.”
Tony Rodio, Chief Executive Officer of Caesars, added: “We believe this combination will build on the accomplishments and best-in-class operating practices of both companies. I’m familiar with Eldorado and its management team, having worked with them on a previous transaction, and I look forward to collaborating with them to bring our companies together.
“We are excited to integrate Caesars Rewards with the combined portfolio. The incorporation of Caesars Rewards has produced strong results at the recently acquired Centaur properties. By joining forces, we believe the new Caesars will be well-positioned to compete in our dynamic industry.”
Shares for Caesars closed at a price of $9.99 a share, with representatives from both parties yet to comment on the alleged merger.
Ed Pitoniak, Chief Executive Officer of VICI, concluded: “VICI is honored and excited to be integrally involved with Eldorado in this transformative transaction. As a REIT, we seek to partner with operators who have the most powerful, valuable and enduring relationships with the end users of our real estate. Under Tom Reeg’s leadership and front-line focus, the combination of Eldorado and Caesars will yield the most compelling guest experiences and network effect in American gaming.”