Eldorado Resorts Acquisition of Caesars Approved

Eldorado Resorts may not be the most well-known name in the US gaming industry, however they made a massive splash after it was recently announced that they will be acquiring Caesars Entertainment for a little more than $8.5 billion. The deal, which is comprised of cash and stocks, will see Eldorado become the largest gaming operator in the United States, spanning more than 60 properties across more than 15 states. Before this deal, Eldorado laid claim to just a few more than 20 total properties.

This deal is still subject to approval by state gaming regulators, however it was fully approved by the boards of both Caesars and Eldorado.

An Icahn-Orchestrated Sale

This deal really got started during the early parts of 2019 when business mogul and billionaire Carl Icahn was revealed as a 10% owner of Caesars earlier this year. Along with this revelation came an announcement from Icahn that he believes the company should be sold. Icahn even went as far as to call for the removal of then-CEO Mark Frissora. In the end, Icahn got his wish as Frissora was replaced in April by Anthony Rodio.

Caesars has been struggling for about a decade now, struggling with both debt and bankruptcy filings. In the end, however, Caesars stock was valued at $12.75 per share for this merger deal, a number that far exceeded even the most ambitious estimates from analysts. When you consider that Caesars stock was valued at just over $6 only four years ago, this deal makes Carl Icahn look like a genius.

In his own statement, Icahn said, “While I criticized the Caesars Board when I took a major position several months ago, I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction.”

How It All Shapes Up

If you include debt, the total value of this deal is more than $17 billion according to a joint release from both organizations. The newly-formed company will still retain the Caesars name and branding, however it will now be based out of Reno, Nevada. In a statement, Eldorado CEO Tom Reeg said, 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.”

As it stands currently, many of Eldorado’s properties are located in the southern and eastern parts of the country. With the acquisition of Caesars, they will now lay claim to properties in the middle of the country, in places like Indiana, where Caesars has a strong and long-standing foothold.

Eldorado has made a name for itself in a relatively short period of time, having only been founded in the early 1970s. Their flagship casino is in the city where the company was founded, Reno, Nevada, though their properties extend as far as Atlantic City. Eldorado’s business dealings with Carl Icahn are not something new, either. Just last year, Icahn sold Tropicana Entertainment to the Reno-based company. In total, this merger will see Eldorado (or the new Caesars) own and operate more than 75,000 slot machines, nearly 4,000 table games, and play host to more than 50,000 hotel rooms.

Eldorado has been blazing a trail through the big names of the US casino industry, and it is interesting to see where they will go next. If this deal goes through smoothly, the new Caesars will be a force to be reckoned with by the likes of Wynn and MGM.