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Eldorado Resorts and Caesars merge to create US gaming giant


Eldorado Resorts and Caesars Entertainment Corporation have entered into a definitive merger agreement that will create a new market leader in the US gambling sector. 

The deal will see Eldorado acquire all outstanding shares in Caesars for a value of $12.75 per share, consisting of $8.40 per share in cash, and 0.0899 shares of Eldorado common stock, for a total consideration of around $17.3bn. This breaks down to $7.2bn in cash, and approximately 77m Eldorado common shares, and sees the operator assume Caesars’ net debt. 

Upon closing, Eldorado shareholders will hold 51% of the combined entity’s outstanding shares. A new, 11-member board will be established, with six directors coming from Eldorado’s board, and five from Caesars.

The new business, which will operate around 60 casino resorts and gaming facilities across 16 states, will operate under the Caesars name, and continue to trade on the Nasdaq Global Select Market.

“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,” Eldorado chief executive Tom Reeg said. “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.”

Through the deal, Eldorado expects to achieve around $500m in synergies in the first year following the deal’s completion. 

“As with our past transactions, we have a detailed plan for significant synergy realization,” Reeg explained. “Relative to our prior acquisitions, the combination with Caesars presents attractive incremental revenue synergy opportunities as we plan to strengthen Caesars Rewards, the industry’s leading player loyalty and CMS database, and combine it with Eldorado’s to market to over 65 million rewards customers nationally. 

Caesars chief executive Tony Rodio added: “We believe this combination will build on the accomplishments and best-in-class operating practices of both companies. I’m familiar with Eldorado and its management team, having worked with them on a previous transaction, and I look forward to collaborating with them to bring our companies together. 

“We are excited to integrate Caesars Rewards with the combined portfolio,” Rodio said. “The incorporation of Caesars Rewards has produced strong results at the recently acquired Centaur properties. By joining forces, we believe the new Caesars will be well-positioned to compete in our dynamic industry.”

The operator’s chairman Jim Hunt described the deal as the culmination of a thorough evaluation of strategic options conducted by the Caesars board. 

“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,” Hunt said.

In related news, Eldorado has struck a $3.2bn master transaction agreement with VICI Properties, the real estate investment trust spun off from Caesars in 2017. This will see it acquire the real estate of three assets and amend existing leases and right of first refusals.

Through the transaction, VICI will acquire the real estate associated with Harrah’s Resort Atlantic City, Harrah’s Laughlin Hotel & Casino and Harrah’s New Orleans Hotel & Casino for $1.8bn. These properties will be added to an existing master lease, with the Eldorado-Caesars business paying annual rent of $154m for the real estate.

The existing Caesars Palace Las Vegas and Harrah’s Las Vegas single asset leases will also be combined into a new Las Vegas master lease of $98.5m, resulting in proceeds of $1.4bn. VICI will also gain put/call option on assets acquired by Caesars from Centaur Holdings in July last year, and has been granted first refusal on whole asset or sale-leaseback transactions on two Las Vegas Strip properties and the Horseshoe Casino Baltimore.

“VICI is honored and excited to be integrally involved with Eldorado in this transformative transaction,” VICI CEO Ed Pitoniak said. “As a REIT, we seek to partner with operators who have the most powerful, valuable and enduring relationships with the end users of our real estate. 

“Under Tom Reeg’s leadership and front-line focus, the combination of Eldorado and Caesars will yield the most compelling guest experiences and network effect in American gaming.”

The transactions have been unanimously approved by the boards of Eldorado, Caesars and VICI, though remains subject to approval of both operator’s shareholders. The deal is expected to be closed in the first half of 2020.