Caesars Entertainment and Eldorado Resorts Complete Merger
Gird your loins, Caesars Entertainment and Eldorado Resorts have completed their merger.
The $17.3 billion merger makes Caesars Entertainment the largest casino company in the U.S.
In honor of the newly-consummated merger, the company rolled out a new logo. We are not making this up.
Caesars Entertainment (and the company formerly known as Eldorado Resorts) now owns and operates more than 55 casinos worldwide. Naturally, we only care about the eight in Las Vegas.
The companies will combine their loyalty clubs under the Caesars Rewards brand. Caesars Rewards will have 60 million members, many of them super excited to see which perks will be reduced first.
It’s been a wild ride for Caesars and Eldorado since the merger was announced back in June 2019. Despite the skeptics, including us, the two companies have made good on their ambitious plans, even smack dab in the middle of a pandemic.
The company’s final merger hurdle was surmounted July 17, 2020, with approval by regulators in New Jersey.
Given the final green light, Caesars and Eldorado wasted no time in completing the merger. One of the reasons: Eldorado was obligated to pay $2.3 million a day in “ticking fees” for every day the deal was delayed. Those fees started amassing back in late March 2020.
Had the deal not gone through, Eldorado would’ve been on the hook for bajillions. Rough estimate.
As soon as the Caesars and Eldorado merger was approved, layoffs reportedly began at Caesars, with more on the way.
Company officials have said they’ll look for at least $500 million in “synergies” from the merger. “Synergies” rarely bode well for employees of an acquired company.
While we tend to look on the bright side of things, there are so many red flags with the Caesars/Eldorado merger, it looks like a Moscow Victory Day parade.
For starters, the merger involves a $7.2 billion cash payout by Eldorado. The company is already highly leveraged, and the future is uncertain given the aforementioned pandemic.
Eldorado has weathered the COVID-19 storm better than many in the casino industry (thanks, regional casinos), but there’s a long, unpredictable slog ahead.
Caesars Entertainment, too, has a lot of debt. The company has paid $1.3 billion in annual net interest on its debt in each of the last two years.
Combined, the two companies will have about $19 billion in debt.
That said, the companies are optimistic, so let’s just go with that!
Disastrous logo aside, there’s potential upside of the merger if Eldorado shakes things up at Caesars Entertainment.
Caesars is expected to sell of a couple of its Strip casinos, and that could lead to some new competition by entities who aren’t already players in Las Vegas.
We hear Planet Hollywood is likely to be sold, and Cromwell has also had its tires kicked by potential suitors.
The bottom line: This is easily the weirdest time in history to do a casino merger. Or any merger, really.
Here’s hoping the Caesars Entertainment and Eldorado Resorts merger defies the odds and shakes things up to the benefit of casino guests and stockholders.
Vegas loves when a longshot pays off.