- »Eldorado Resorts Completes Caesars Buyout for $17.3B
Eldorado Resorts Completes Caesars Buyout for $17.3B
Eldorado Resorts did it. The company bought Caesars Entertainment for $17.3 billion.
The deal took well over one year to complete, and both companies had to sell some companies, move some interests around per regulatory requests. But it is final. Eldorado is now Caesars Entertainment and owns more than 65 casino properties in North America.
And it only cost $17.3 billion.
The Original Announcement
After rumors swirled for months about Eldorado and Caesars in discussions – even exchanging financial information – a June 24 announcement last year made it real. Eldorado shareholders wanted 51% of the combined shares of Caesars Entertainment. And the two gaming companies wanted to close the deal in the first half of 2020.
Eldorado had already been growing, having recently acquired Tropicana Entertainment and the Isle of Capri casinos in the past few years. Eldorado’s stock was also on a positive trajectory.
In addition, billionaire investor Carl Icahn endorsed the deal. His position as a significant shareholder in Caesars provided a voice and influence with the board of directors. He already moved Anthony Rodio into the CEO position and then openly supported the Eldorado deal.
A Long Way from the Eldorado Hotel
It all started with Don Carano and members of his family, accompanied by a few investors, opened the Eldorado Hotel Casino in Reno, Nevada, in May 1973. The hotel and casino remained a solo operation for more than two decades.
In 1995, Carano expanded and opened the Silver Legacy Resort Casino via a new partnership with Circus Circus Enterprises. Carano then created a larger Eldorado Resorts the following year with a $100 million bond offering.
After the turn of the century, Eldorado grew by leaps and bounds.
Eldorado bought Hollywood Casino Shreveport and rebranded it in 2005. A half-dozen years later, Eldorado combined with MTR Gaming Group in a reverse merger that added three new casinos (in Ohio, Pennsylvania, and West Virginia) to its portfolio. Gary Carano became Eldorado’s CEO, and the company continued to grow with the purchase of Circus Circus Reno in 2015, a dozen Isle of Capri Casinos in 2017, and then Tropicana Entertainment in 2018.
All of that led to the Eldorado move to acquire Caesars.
Moves and Grooves Before the Deal
As a part of the deal, Eldorado planned to sell several properties to VICI Properties. Soon after, Eldorado decided to also sell one of its Isle of Capri casinos and a Lady Luck property. All of the money from the sales was to go toward the cash portion of the Caesars acquisition.
Eventually, MontBleu in Lake Tahoe and Eldorado Shreveport headed to the selling block. And as a part of convincing the New Jersey Casino Control Commission to approve the deal, Eldorado had to promise that the newly-combined company would sell Bally’s Atlantic City. The new Caesars will still own three of the nine casinos there, and they promised to invest $400 million in Atlantic City over the next three years.
With New Jersey’s final approval, the companies signed off on the deal. And it was done.
All Caesars, All the Time
The two companies now operate as Caesars Entertainment.
The Caesars.com website now shows a banner on the homepage that reads: “Welcome to the Empire.”
Further, the website notes that joining of Caesars and Eldorado to create “The largest and most diversified collection of destinations across the US.” The company boasts of more than 55 resorts, including brands like Caesars Palace, Harrah’s, Horseshoe, Eldorado, Silvery Legacy, Circus Circus Reno, and Tropicana.
“Your Empire awaits,” says the website.
Tom Reeg, who was the Eldorado CEO, became the CEO of the new Caesars Entertainment. He commented, “We are pleased to have completed this transformative merger.”
Anthony Carano, who now serves as Caesars President and COO, said that his family is excited to “lead such an iconic gambling company with 80,000 team members all over the country.”
Not an Easy Road Ahead in a Coronavirus Market
That mention of 80,000 team members may be outdated very soon. Caesars already revealed plans to make cuts, ones in addition to the massive numbers of layoffs due to the pandemic. The two companies boasted of more than 112,000 workers prior to those layoffs.
According to Vegas Inc, CFO Bret Yunker noted that the cuts will be handled as “compassionately and transparently as possible.” However, he wouldn’t hint at how many jobs they may eliminate. He said the job reductions are unfortunate. “Reducing the size of a workforce is always challenging to go through.”
Challenging is a word that might also be used to describe the $13 billion in debt that accompanied the deal. Carano claimed, however, that the merger puts the company in a “great financial position” as they move forward. They will reduce the debt, to some degree, by offloading some properties outside of the United States.
Most of the company’s properties have reopened since the pandemic shutdown, though many are still in various stages of reopening. And considering the recent surges in Covid-19 cases in places like Nevada, there might be more adjustments to the reopening schedules going forward.
The market may not see the full potential of the new Caesars Entertainment until 2021 or 2022.