Well that didn’t take long. A couple of days ago we reported that Eldorado Resorts were selling three flyover country properties to Century Casinos. The deal itself was a garden variety transaction but analysts were speculating that it was more of a tactical move by Eldorado as they prepared for a major acquisition. That was definitely the case–it is being reported that Eldorado Resorts is in a merger deal with Caesars Entertainment.
Eldorado Resorts had approached Caesars with an offer earlier this year but it was rejected for being too low. That led to a bit of internal squabbling within Caesars as a group of shareholders led by legendary investor Carl Icahn were of the opinion that the asking price for the company was too high.
The deal announced today is a ‘definitive merger agreement’ between Caesars Entertainment Corporation and Eldorado Resorts in a $17.3 billion cash and stock deal. Separately, the two were already among the largest casino operators in the United States and combined they will operate a total of 60 gaming properties spread across 16 states.
The financial specifics of the deal: Eldorado Resorts are acquiring all of the outstanding shares of Caesars for a total value of $12.75 per share. This figure consists of $8.40 per share in ‘cash consideration’ and 0.0899 shares of Eldorado.
Eldorado will 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. This totals up to $17.3 billion with $7.2 billion in cash and 77 million Eldorado common shares. Eldorado will also assume all of Caesars outstanding corporate debt.
Eldorado Resorts released a statement from CEO Tom Reeg announcing the deal:
“Eldorado’s combination with Caesars will create the largest owner and operator of US 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 US gaming market and will marry best-of-breed practices from both entities to ensure high levels of customer satisfaction and significant shareholder returns.”
Not everyone is thrilled by the deal. Corporate credit ranking firm Moody’s is considering downgrading Eldorado Resorts due to a greater ratio of leveraged debit assumed in the transaction.