Eldorado Resorts and Caesars Entertainment Corporation announced that they have entered into a definitive merger agreement. The proposed transaction will combine two leading gaming companies with complementary national operating platforms, strong brands, strategic industry alliances, and a collective commitment to enhancing guest service and shareholder value. The agreed equity value of US$12.75 a share -in a mix of cash and Eldorado stock- represents a premium of about 28 percent to Caesars’s Friday, June 21st closing price. Including debt, the deal is worth approximately US$17.3 billion, the companies communicated in a statement.
Eldorado’s combination with Caesars will create the largest owner and operator of US gaming assets.
Caesars, whose properties include the flagship Caesars Palace and the Harrah’s chain, is still coping with the fallout of a 2008 leveraged buyout led by Apollo Global Management LLC and TPG that left it with a mountain of debt. The company completed a bankruptcy of its largest unit two years ago that brought in new board members and shareholders, including distressed-debt investors. Apollo and TPG have sold their shares.
Eldorado and Caesars said they have identified benefits of US$500 million by creating a company with 60 owned, operated and managed casino–resorts across 16 states, and expect the deal to boost cash flow immediately. A parallel agreement will see VICI Properties Inc. acquire some of the companies’ real estate, generating US$3.2 billion of proceeds to help pay down debt. Eldorado’s management team will lead the new company, which will continue to operate under the Caesars name and to trade on the Nasdaq Global Select Market.
Tom Reeg, Chief Executive Officer of Eldorado, commented: “Eldorado’s combination with Caesars will create the largest owner and operator of US gaming assets and is a strategically, financially and operationally compelling opportunity that brings immediate and long-term value to stakeholders of both companies. Together, we will have an extremely powerful suite of iconic gaming and entertainment brands, as well as valuable strategic alliances with industry leaders in sports betting and online gaming. The combined entity will serve customers in essentially every major US gaming market and will marry best-of-breed practices from both entities to ensure high levels of customer satisfaction and significant shareholder returns.”
Jim Hunt, Chairman of Caesars, expressed: “This announcement is the culmination of a thorough evaluation by the Caesars Board of Directors. The Board unanimously concluded that the combination of these two companies creating an even stronger entity is a decision for our shareholders’ consideration and vote for immediate and ongoing value.”