FTC Could Approve Eldorado/Caesars Deal Before July, Brokerage Firm Claims
Posted on: June 11, 2020, 10:03h.
Last updated on: June 11, 2020, 11:17h.
The Federal Trade Commission (FTC) could sign off on Eldorado Resorts Inc.’s (NASDAQ:ERI) $17.3 billion acquisition of rival Caesars Entertainment (NASDAQ:CZR) by the end of this month. That would set the stage for three pivotal state approvals to follow soon thereafter, according to a broker-dealer with knowledge of the matter.
In comments provided to Casino.org, Anna Pavlik, senior legal counsel at United First Partners, an event-driven broker-dealer, notes there’s a wide window of potential FTC approval on the transaction – one that ranges from June 29 to July 21.
Based on our conversation with the Twin River Worldwide Holdings, the divestiture buyer of CZR and ERI assets, we believe the FTC may have agreed to the divestiture package in principal and that the review process is quite mature,” said Pavlik. “We think it is logical to assume there is a 45-60 day timing agreement in place between the parties and the FTC, implying an approval in the June 29-July 21 time frame, based on the April 24 announcement date of the Twin divestiture package.”
The transactions being referenced there are the sales by ERI of several properties. These include the Eldorado Shreveport Resort and Casino in Louisiana, the MontBleu Resort Casino in Lake Tahoe, Nevada, and Bally’s Atlantic City by Caesars to Twin River Worldwide Holdings (NYSE:TRWH) for a combined $180 million.
Explaining the Delay
A source interviewed by Casino.org that declined to be identified said the FTC is increasing scrutiny of asset buyers to ensure those acquirers are financially sound. In the case of the commission hearing the ERI/Caesars transaction, delays likely arose from Eldorado changing buyers of the aforementioned Lake Tahoe and Louisiana assets.
Originally, those venues were sold to Maverick Gaming. In fact, privately held Maverick was planning to shell out $230 million just for the Pelican State casino, whereas TWRH is paying $155 million for both that venue and the MontBleu.
For a good portion of this year, consensus hope and speculation was that ERI would bring the Caesars transaction to the finish line by the end of this month. But between the shift in buyers for Louisiana and Northern Nevada assets and the coronavirus pandemic, the FTC approval process was slowed.
Big 3 Waiting on FTC
Pavlik said United First Partners sees the transaction creating the largest US gaming company by number of properties closing in late July or early August. Vital state-level approvals from Indiana, Nevada and New Jersey will come after the FTC signs off on the deal.
“With the remaining state approvals (Indiana, Nevada, and New Jersey), we expect the state regulators to wait for FTC approval,” she said. “Once the FTC approval is received, we believe the remaining state agencies will need four to six weeks to approve the transaction.”
Earlier this week, reports surfaced that the Indiana Gaming Commission (IGC) and the Indiana Horse Racing Commission (IHRC) could discuss ERI’s acquisition at their July meetings. But dates for those confabs haven’t been set.
“In Nevada, the transaction first needs to be recommended for approval from the Nevada Gaming Control Board (GCB), and then approved by the Nevada Gaming Commission (NGC). GCB and NGC’s July meetings are July 15 and July 30, respectively,” said Pavlik.
In the Garden State, where the combined ERI/Caesars will control three of the nine Atlantic City casinos, the Casino Control Commission (CCC) gets together next on July 15. But Pavlik said it’s likely a special meeting will be called to discuss the transaction.
A source told Casino.org that in large-scale gaming industry consolidation, it’s not uncommon for Nevada and New Jersey to wait for the FTC to first render a decision. That’s because by doing so, it makes the states’ jobs easier and reduces the risk of issuing a call that runs counter to the federal government.
There’s a June 24 termination date on the ERI/Caesars proposed marriage. But that timeline gets pushed to September 24 and then to December 24 if the necessary regulatory approvals aren’t gained by the first date, according to Pavlik.
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