Eldorado Resorts Inc., a U.S casino operator has decided to merge with Caesars Entertainment Corp. in a cash and stock deal. Eldorado values its peer at about $18 billion including debt, reports Reuters.
The agreement comes three months after Caesars agreed to give Eldorado access to its books under pressure from billionaire investor Carl Icahn. Icahn was awarded a seat on Caesar’s board earlier this year. In a statement discussing the merger, he said, “It is rare that you see a merger where because of the great synergies ‘one plus one equals five. I look forward to seeing our investment prosper.”
How will ownership be split post the merger?
The deal values Caesars at close to $13 a share. The combined ownership will be split roughly between Eldorado and Caesars shareholders. Caesar’s recently emerged from bankruptcy in 2017 and operates casinos with the Harrah’s and Horseshoe brands. It had 53 properties in 14 states and five countries outside the United States at the end of March. Further, its long-term debt stood at $8.79 billion.
Eldorado’s market value is about $4 billion. It was also in long-term debt of about $3.06 billion at the end of March. The organisation owns and operates 26 properties in 12 states extending from Nevada eastward to states such as Colorado, Missouri, Louisiana and New Jersey. Post the merger, the combined entity will keep the Caesar’s name.
Eldorado will take control of several properties
Eldorado will take control of a portfolio that includes Caesars Palace, Harrah’s and Bally’s, giving it a total of some 60 properties in 16 states. Shareholders at Eldorado and Caesars will hold about 51 percent and 49 percent, respectively, of the combined company’s outstanding shares. Additionally, the merger will also include a $3.2 billion side deal with VICI Properties.
The merger will create serious competition to larger casino industry players such as Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International.