For months, rumors have been swirling that Eldorado Resorts was in the process of buying Caesars Entertainment. Not long ago, it appeared that the deal had fallen through, and some analysts felt it would never come to fruition. These analysts were incorrect.
Eldorado is confirming that it has officially agreed to purchased Caesars Entertainment for $17.3 billion. The merging of these two major brands forms one of the most powerful casino-resort companies in the world. Let’s take a quick look at why and how this deal has been made.
Eldorado’s Road to Buy Caesars Entertainment
Eldorado has certainly had a busy past few years. In October of 2018, news came out that this major casino company acquired Tropicana Resorts for nearly $2 billion. Most experts believed it was a move to gain leverage over Caesars Entertainment.
As we just mentioned, this deal with Caesars has been rumored to take place for months. Back in March, reports began to surface that company officials were working to finalize the terms of the Caesars buyout. Both parties worked on terms of the cash-and-stock deal, yet it seemed they hit a standstill.
Earlier this month, Eldorado Resorts announced that it was selling three of its properties formerly operated by Tropicana Resorts. This includes the Mountaineer Casino in West Virginia. At the same time, Eldorado began investing more into the Tropicana Atlantic City, one of the most successful casinos in New Jersey.
Officials in Eldorado Resorts remained committed to purchasing Caesars. Finally, a deal between these two gaming giants was made. Eldorado has now agreed on terms to purchase Caesars Entertainment for $17.3 billion.
Eldorado Resorts and Caesars Entertainment Become One
This deal forms one of the largest gambling and entertainment ventures in the United States. Eldorado will soon control over 60 casinos across 16 different states. This includes a number of major casinos in Atlantic City, and online casinos based across the country.
It comes at a good time for Caesars. In late 2017, this company emerged from bankruptcy protection. Back in 2018, billionaire businessman Carl Icahn purchased a massive stake in Caesars and immediately began calling for changes.
Tom Reeg, CEO of Eldorado Resorts, voiced his excitement for the deal in a recent statement to the media.
“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,” he said. “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 Eldorado-Caesars deal is expected to officially close in the first half of 2020. First, the two companies must gain approval from state gambling regulators and major shareholders. Regulators in Atlantic City are already working to conclude whether or not this merger will be fair for other casinos in the state.
What Does This Mean for Both Companies Moving Forward?
Eldorado Resorts will be taking control of Caesar’s gaming venues. Under the terms of the deal, the company will retain the “Caesars” name and is being led by the aforementioned Tom Reeg and Eldorado chairman Gary Carano. The headquarters of the company will be based in Reno, Nevada.
Eldorado is acquiring all of the outstanding shares of Caesars Entertainment for a value of $12.75 per share. Shareholders of Eldorado will retain 51% of the merged company’s outstanding shares. Caesars shareholders retain 49%.
With more than 60 casino venues spread around the country, the new Caesars is perhaps the most powerful gambling operator in the country. It’s likely that over the next few years, the company will begin pushing hard into Asia. Japan, in particular, is expected to be one of the most lucrative gaming markets for casinos in the near future.
Do you think this merger will help Caesars moving forward? What issues do you expect from state regulators? Make sure to stay tuned for updates on the situation as they come out!