Eldorado agrees $8.5bn Caesars merger

September 2019 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

September 2019 Issue

Creating the largest gaming company in the US, casino-entertainment companies Eldorado Resorts, Inc and Caesars Entertainment Corporation are to merge in a transaction valued at $8.5bn.

The definitive agreement will see Eldorado acquire all of the outstanding shares of Caesars for a total value of $12.75 per share, consisting of $8.40 per share in cash consideration and 0.0899 shares of Eldorado common stock for each Caesars share of common stock.

The transaction has been unanimously approved by the boards of directors of Eldorado and Caesars. Eldorado and Caesars shareholders will hold approximately 51 percent and 49 percent of the combined company’s outstanding shares, respectively.

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, their combination will provide guests with access to approximately 60 domestic casino resorts and gaming facilities across 16 states.

“This transaction is the culmination of a thorough evaluation by the Caesars board of directors,” said Jim Hunt, chairman of Caesars. “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.”

Founded in 1937, Caesars has grown through development of new resorts, expansions and acquisitions, and now operates casinos on three continents. Currently owning and operating 34 casinos and resorts, Caesars domestic properties feature approximately 48,000 slot machines and video lottery terminals (VLTs) and approximately 3000 table games, and over 39,000 hotel rooms. The company is based in Las Vegas, Nevada.

“We believe this combination will build on the accomplishments and best in class operating practices of both companies,” said Tony Rodio, chief executive of Caesars. “I am 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.”

Operating in 12 states, Eldorado’s 26 properties feature approximately 23,000 slot machines and VLTs and approximately 650 table games, and over 12,000 hotel rooms.

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

Serving as financial advisers to Eldorado are J.P. Morgan, Credit Suisse and Macquarie Capital, with Milbank LLP and Latham & Watkins LLP serving as legal counsel. PJT Partners LP is serving as financial adviser to Caesars, with Skadden, Arps, Slate, Meagher & Flom LLP serving as legal counsel.

The transaction, which is expected to be completed in the first half of 2020, is subject to approval of the stockholders of Eldorado and Caesars, the approval of applicable gaming authorities, the expiration of the applicable Hart-Scott-Rodino waiting period and other customary closing conditions.

Mr Reeg concluded: “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.”

Fraser Tennant