A proposed merger between Reno-based Eldorado Resorts and Isle of Capri of St. Louis lurched ahead when shareholders of the respective companies voted to approve the deal during a special investors meeting Wednesday afternoon.
The $1.7 billion transaction, which was first announced in September 2016, will create one of the largest regional gaming conglomerates in the United States should the deal close as planned in the second quarter of 2017.
The new entity will feature 19 casino properties in 10 states offering more than 20,000 slot machines, 550 table games and 6,500 hotel rooms.
“The acquisition of Isle of Capri represents a significant milestone in our long-term strategy to expand our regional gaming platform through accretive acquisitions,” said Gary Carano, Eldorado chairman and chief executive. “Upon completion of the transaction we will substantially increase the scale of our gaming operations and further diversify the geographic reach of Eldorado.”
Eldorado began in the 1970s as a local casino operator in the Reno area. It began its expansion through an acquisition campaign in 2014 when it acquired MTR Gaming. With the purchase of Isle of Capri, Eldorado will have effectively multiplied itself by a factor of six in just three years.
The merger is unusual in the sense that Eldorado, which previously owned just seven properties, is buying out a company that is twice its size. Isle of Capri has a portfolio of 14 properties, though two of these – Lady Luck Casino Marquette and Isle of Capri Casino Hotel Lake Charles will be divested from per the terms of the deal.
The combined entity would have generated roughly $2 billion in revenue during fiscal year 2016.
Shareholders of both companies expressed overwhelming support for the merger during the special session, with 99 percent of both Eldorado and Isle of Capri voting to approve the deal.
Having won investor approval, the new entity will continue working to earn the blessing of regulators in its jurisdictions and assimilating the new properties into the Eldorado brand.
“Since entering into the agreement, we have made progress towards the completion of the transaction including dialogue and meetings with gaming regulators and the development of detailed plans to optimize the operations of the combined company’s properties,” said Carano.
Carano has noted that he expects the integration process to be relatively smooth due to the historical and cultural similarities between the two companies, and that this ease of transition should create efficiencies that will have a positive effect on shareholder value.
“We expect that our planned initiatives to implement our margin enhancement strategies across the Isle of Capri property portfolio while elevating the customer experience by marrying best practices from both companies will position Eldorado for near and long-term success,” he said.
Isle of Capri, which had been in search of an exit strategy since Eric Hausler assumed the chief executive role in January 2016, cheered the transaction.
“Today’s vote is an important step towards providing Isle of Capri shareholders with substantial and immediate value, as well as the opportunity to participate in the upside potential of the combined company through the transaction with Eldorado,” said Hausler. “I believe Eldorado has a solid plan in place to quickly integrate the two companies and I look forward to working closely with the Eldorado team to bring our companies together to realize the benefits of this compelling combination and ensure a smooth transition.”
The terms of the merger agreement are that Eldorado will acquire all outstanding shares of Isle of Capri for $23 or 1.638 shares of Eldorado common stock. At the deal’s completion, Eldorado shareholders will hold roughly 62 percent of the new entity while Isle of Capri investors will retain 38 percent.
