Eldorado Resorts Nearing Acquisition of Caesars Entertainment, Deal Could Be Announced This Month
Posted on: June 7, 2019, 09:15h.
Last updated on: June 7, 2019, 09:15h.
Regional casino operator Eldorado Resorts is inching closer to merging with gaming industry giant Caesars Entertainment.
The Wall Street Journal says a deal could be announced as early as this month. The two casino operators are said to be working on a cash and stock deal that appeases both sides – specifically billionaire corporate raider Carl Icahn, who controls a 28.5 percent stake in Caesars.
However, the New York Post reports that Caesars recently rejected an offer that valued the company at $10.50 per share. The casino stock closed at $9.13 on Thursday. The 15 percent premium is apparently too low to entice Icahn into agreement.
They want to do something if it is at the right price,” a source told the Post of Caesars and Icahn. “If Eldorado raises their price, something will happen.”
Caesars controls around 50 casinos in 13 states and five countries. Eldorado Resorts – a company primarily focused on regional gaming venues – has 26 properties, all of which are in the United States.
Eldorado is staying mum on the rumors, its CEO Thomas Reeg telling investors, “I know there are going to be a lot of people that want to ask questions about articles they read in the paper about us. We read the same newspapers. We’re not going to comment on any particular potential transaction.”
Reno-based Eldorado Resorts isn’t the only casino operator interested in Caesars. Boyd Gaming and billionaire Tilman Fertitta’s Golden Nugget have also considered bids for the company that owns Caesars Palace, Harrah’s, and Bally’s.
The frontrunner, however, is Eldorado. The company has been interested in Caesars dating back to last fall. If a deal to unite the companies prevails, reports suggest that Eldorado’s management will lead the combined group.
“The deal is very close,” another source told the Post.
That could mean that Icahn’s hand-picked Caesars CEO Anthony Rodio’s days as chief executive could be numbered. As Casino.org reported last month, if Eldorado buys Caesars, Reeg is likely to become the top boss of the unified organization.
If the reports are correct, Eldorado will apparently need to pay a premium price to acquire Caesars.
Reeg has been working to find a way to reduce $500 million in Caesars operating expenses. A source told the Post in May, “My hunch is he’s not going to get there.”
Caesars’ operating costs have been inflated due to the company’s emergency from bankruptcy.
CFO Eric Hession told investors during a recent call, “We’re focused on reducing corporate costs. They are currently elevated due to our IT transformation and sports betting businesses, and we expect to show improvement later in the year from the current run rate.”
Eldorado Resorts has a market value of around $4 billion, and debt of roughly $3 billion. Meanwhile, Caesars is valued at $6 billion, but holds long-term debt of $9 billion.
However, Caesars owns numerous casinos located on the coveted Las Vegas Strip. Billionaire Phil Ruffin said recently that Strip assets are “irreplaceable.”