Eldorado Bags Caesars In US$17.3Bn Deal
At 28% premium on the current market price, the acquired operator could not complain. Reports suggest the price was the result of haggling. Investor Carl Icahn, whose stake in the company is 28.5%, reportedly wanted the Caesars board to accept a lower price per share.
Whereas the board wanted $13 per share, Eldorado offered $10.50; possibly motivated by the accumulated debts of Caesars it highlighted. The offer, however, was too low for Icahn, who wanted at least $12 per share.
Deal Adds Value
Eldorado CEO Tom Reeg said that the entertainment and gaming brands brought together by the deal was a powerful offering. He added that the acquisition also meant strategic partnerships within the gaming and betting industries were enriched.
Reeg’s vision of a gambling entity of which the whole is greater than the sum of its parts is shared by Icahn. The investor said the synergy between the two operators meant the merger resulted in something significantly bigger.
Deal Follows Casino Sales
Eldorado’s Caesars acquisition followed shortly after the sale of three of its most important casinos. The operator announced the $385 million deal in June.
According to reports, the Lady Luck Casino and Isle Casino Cape Girardeau in Missouri, as well as the West Virginia Mountaineer Casino Racetrack and Resort were sold to Century Casinos and Vici Properties. Operating rights will cost the former $107 million, while the latter will spend $278 million on purchasing the properties.
Eldorado Resorts grew from the Eldorado Hotel in Reno. Don Carano and several of his family members were among the investors who opened the venue in 1973. After opening the Silver Legacy Resort Casino with Circus Circus Enterprises in 1995, the companies were restructured and rebranded. The 1996 rebranding was linked to a bond offering of $100 million.
Among its recent acquisitions were the $328 million August 2018 deal for the Grand Victoria Casino in Illinois, and the $640 million deal for the operator Tropicana Entertainment, which brought with it 7 different venues. It also bought the real estate of Lumière Place casino for $246 million. However, the real estate of 5 of those casinos was bought by Gaming and Leasing Properties, which leased them to the operator for $88 million per annum.
The operator also has set its sights on the worldwide web. In November 2018, it struck a 20-year deal with the Stars Group. The partnership should see both brands grow within the US online casino market.