Eldorado Buys Caesars

Eldorado buys Caesars.
   
Eldorado Resorts buys Caesars Entertainment for $17.3 billion.
   
Caesars brands include Harrah's, Caesars, and Horseshoe, with 34 casinos and resorts, 39,000 hotel rooms, 48,000 slot machines, and 3,000 table games.
   
Eldorado operates 26 properties, including Tropicana in Atlantic City, and Eldorado in Reno, with 12,000 hotel rooms, 23,000 slot machines, and 650 table games.
   
Tom Reeg of Eldorado 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 a powerful suite of iconic gaming and entertainment brands, as well as valuable strategic alliances with industry leaders in sports betting and online gaming. The joint 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.’

   

A parallel agreement will see VICI Properties buy some of the companies’ real estate. VICI owns properties that Caesars leases and operates, such as Caesars Palace in Las Vegas and Caesars Atlantic City. To help finance the deal, VICI, Caesars, and Eldorado have agreed to sell Harrah's Resort Atlantic City, Harrah's Laughlin Hotel & Casino, and Harrah's New Orleans Hotel & Casino to VICI for $3.2 billion. The companies have also restructured lease agreements between VICI and Caesars.

   

Tom Reeg added: ‘As with our past transactions, we have a detailed plan for significant synergy realization. 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. The transaction bears benefit beyond the strategic merits of the combination with Caesars in isolation. Our agreement with VICI favorably positions both platforms by enhancing the value of our joint company’s assets and further solidifies the growth profile of VICI.

   

Eldorado’s history of completing successful, value-enhancing transactions has focused on prioritizing operating discipline with the goal of delivering best-in-class gaming and entertainment experiences and amenities to customers, unlocking the long-term value of acquired companies and assets through effective financial management, and completing return-focused investments in our properties that elevate the guest experience as well as our competitive position and returns. We intend to allocate the significant free cash flow from the joint company to reduce leverage while investing to improve the customer experience across the platform. We could not be more excited about the future as we bring together two industry leaders that will generate significant opportunities for our employees, customers, partners, and shareholders.’

   

Jim Hunt of Caesars said: ‘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.’

   

Tony Rodio of Caesars said: ‘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 an earlier transaction, and I look forward to collaborating with them to bring our companies together. We are excited to integrate Caesars Rewards with the joint portfolio. The incorporation of Caesars Rewards has produced strong results at the acquired Centaur properties. By joining forces, we believe the new Caesars will be well-positioned to compete in our dynamic industry.’

   

Ed Pitoniak VICI said: ‘VICI is honored and excited to be integrally involved with Eldorado in this transformative transaction. 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.’

   

Carl Icahn said: ‘While I criticized the Caesars board when I took a major position 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. It's rare that you see a merger, where because of the great synergies, one plus one equals five. I look forward to seeing our investment prosper.’

   

Chad Beynon of Macquarie said: ‘Eldorado is 5 for 5 in the merger department, and every time they announce synergies, they find more.’

   

JP Morgan, Credit Suisse, and Macquarie Capital served as financial advisers to Eldorado. Milbank LLP and Latham & Watkins served as legal counsel.

PJT Partners serves as financial adviser to Caesars. Skadden, Arps, Slate, Meagher & Flom serves as legal counsel.