- »Changes on the Way Before Final Caesars-Eldorado Merger
Changes on the Way Before Final Caesars-Eldorado Merger
Little more than one month ago, Eldorado Resorts announced that it will buy Caesars Entertainment Corporation. At the time, the Caesars-Eldorado merger between the two casino giants was going to be one of the largest gambling industry mergers in North American history.
Since that time, much speculation has surrounded potential actions by both companies to ensure that the deal is not flagged out of monopoly concerns. There are some confirmed changes, but rumours do still abound.
Caesars-Eldorado Merger Deal Refresher
Eldorado Resorts and Caesars Entertainment did sign an agreement that will put Eldorado in possession of the two companies. The value of the Caesars-Eldorado merger deal was reportedly $17.3 billion in cash and stock. The cash part will be $7.2 billion. At the time of sale, the stock price was $13.01 per share.
Ultimately, Eldorado shareholders will hold 51% of the combined shares. The first half of 2020 will likely see the deal closed.
Most analysts reported a favourable outlook for both companies. They noted that the deal would be a positive step for both companies and the industry as a whole. Not only will Caesars be able to step away from years of debt and doubt, Eldorado will profit.
The agreement was a long time coming for billionaire investor and Caesars shareholder Carl Icahn, who went through a lot of trouble to secure spots on the board of the directors and exert enough influence to ensure that the deal happened. As an activist shareholder, he believed he made a difference for all stockholders and helped approve the “transformational transaction.”
Firm Commitments to Sell
The one and only firm commitment to sell a property as laid out in the final Eldorado-Caesars agreement related to VICI Properties. Eldorado planned to sell some real estate to VICI Properties and increase rent at other properties to come up with $3.2 billion of the cash needed.
Eventually, it was revealed that VICI was going to take possession of three casinos. The company will take over Harrah’s New Orleans, Harrah’s Laughlin, and Harrah’s Atlantic City for a total of $3.2 billion. That money will go toward the Caesars deal.
In the weeks that followed, two properties were revealed to be on the selling block. These were the Isle of Capri Casino in Kansas City, Missouri, and the Lady Luck property in Vicksburg, Mississippi. Twin River Worldwide Holdings agreed to buy them for $230 million in cash. The money will also be used to contribute to the cash portion of the Caesars acquisition.
Other casino for sale could include some Caesars properties. The Las Vegas Review-Journal said that the selling of at least two Las Vegas Caesars properties is likely. Eldorado CEO Thomas Reeq has since confirmed the possibility.
Bring on the speculation.
The Strip properties available are Caesars Palace, Bally’s, The Linq, Flamingo, Paris, The Cromwell, and Planet Hollywood. The Flamingo and Planet Hollywood are most likely selling candidates, though. Some have speculated that the Linq might also go with Flamingo.
Treasure Island owner Phil Ruffin has long been interested in buying another Strip casino. Meanwhile, Golden Nugget owner Tilman Fertitta, too, may want a piece of the pie after being outbid for Caesars by Eldorado. Both companies would like to be a larger part of the Las Vegas Strip.
Another long-standing rumour is that the Rio All-Suite Hotel and Casino is up for sale as well. The home of the annual World Series of Poker has been suffering from low year-round business for some time, and it wouldn’t be a surprise if Eldorado wanted Caesars to sell it before the deal is final. The World Series of Poker brand may then be offerd to the new Rio buyer, too.
Many players have been hoping for such a sale for several years, as the Rio is not on the Strip, and they would like the WSOP to be more accessible.
Not For Sale
So far, the only Caesars-managed property in Canada is not reportedly up for sale. The Ontario Lottery and Gaming Corporation (OLG) owns it, and Caesars will likely continue its management of Caesars Windsor to maintain its presence in Canada, albeit a limited one.
The selling of Caesars flagship property, Caesars Palace, however is unlikely. There are no rumours surrounding Harvey’s Lake Tahoe, either, which is likely safe for now.