MGM Didn’t Consider Buying Caesars Properties Before or After Eldorado Deal, Won’t Do So Going Forward
Posted on: July 26, 2019, 10:10h.
Last updated on: July 27, 2019, 12:59h.
MGM Resorts International (NYSE: MGM) didn’t consider buying properties from rival Caesars Entertainment Corp. (NASDAQ: CZR) before or after Eldorado Resorts, Inc. (NASDAQ: ERI) announced a $17.3 billion takeover offer for the Las Vegas-based company.
On MGM’s second-quarter earnings conference call Thursday, CEO Jim Murren said the company won’t be acquiring Caesars venues in the future.
Just to be crystal clear here, we like what we own, and I’m not really interested in owning much anything else,” said Murren. “We didn’t look at the Caesars assets before the El Dorado trade and we’re certainly not going to look at them now.”
Previous reports indicate that after Eldorado completes the acquisition in the first half of 2020, it could consider selling one or more of Caesars’ Strip properties. Should that happen, there are likely to be plenty of willing buyers. Just not MGM.
Not Looking To Buy Just To Get Bigger
MGM’s lack of interest in acquiring gaming venues from rivals, Caesars or otherwise, jibes with recent chatter that the company is mulling the sales of the Bellagio and MGM Grand on the Las Vegas Strip in what would be sale-leaseback deals.
While Murren did not comment directly on the potential sales of those prized Strip properties on Thursday’s earnings call, he did say MGM’s real estate committee is making progress on its objective to unleash shareholder value through property holdings and that an update on that front is expected in the early fall.
The MGM CEO also said on the call that he prefers an “asset lighter” model, indicating the company is an unlikely buyer of other casinos over the near-term.
“We’re not looking at other opportunities to own bricks-and-mortar businesses simply to be in a market,” said Murren. “As we’ve said, if we don’t believe we could be a market leader and bring an entertainment component to a resort, we’re not interested in investing the shareholders’ money just to be bigger.”
For its part, Eldorado has already announced the sale of eight casinos for a combined price tag of over $3.8 billion in an effort to defray some of the $8.5 billion cash and equity portion of the Caesars takeover.
Should the regional gaming company look to divest a Caesars asset in Las Vegas, it may not have to look far for a willing buyer. As part of the $3.2 billion sale of Harrah’s New Orleans, Harrah’s Laughlin, and Harrah’s Atlantic City to VICI Properties Inc. (NYSE:VICI), announced the day the Caesars acquisition offer was revealed, Eldorado entered into another agreement with the gaming real estate company.
VICI gets the first attempt to buy one of the following Caesars Strip venues: Flamingo Las Vegas, Bally’s Las Vegas, Paris Las Vegas, and Planet Hollywood Resort & Casino.
Should that deal happen, VICI would also have first dibs on one of the remainders from that group and the LINQ Hotel & Casino.
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