Reno-based Eldorado Resorts announced the closing of its $1.7 billion merger with Isle of Capri Casinos Monday, marking the completion of a deal first announced last September.
With the acquisition, first announced in September 2016, Eldorado effectively doubled itself in size by adding 12 casino resort properties.
The new entity will be a regional gaming empire that features 19 casino properties across 10 states, 20,000 slot machines and video lottery terminals, 550 table games and 6,500 hotel rooms.
Eldorado and Isle of Capri would have combined to produce $1.7 billion in revenues and $394 million in adjusted EBITDA for the 2016 calendar year.
“Our acquisition of Isle of Capri marks a significant milestone in Eldorado’s history of growth through strategic, accretive acquisitions,” said Gary Carano, Chairman and Chief Executive Officer of Eldorado. “The combination significantly expands the scale of our gaming operations, further diversifies our geographic reach into new markets and minimizes market-specific risk.”
Eldorado began its aggressive expansion campaign in 2014 when it acquired MTR Gaming. Now, the company has effectively multiplied itself by a factor of six.
“We are delighted to welcome the Isle shareholders and team members to the Eldorado family,” said Carano. “We believe that Eldorado is positioned for continued growth with a portfolio of premiere regional gaming assets, a solid balance sheet and an attractive weighted average cost of capital. Our experience in integrating the MTR assets and Silver Legacy and Circus Circus operations will serve us well as we add the Isle of Capri assets to our operating base.”
Carano emphasized that the next phase would be aligning systems and best practices across both companies.
“We intend to implement our strategy of focusing on margin enhancement and customer service and experiences across the portfolio by marrying best practices from both companies,” he said. “Led by our gaming, hotel management and food and beverage teams with a long-term record of operating execution and M&A integration, we believe that Eldorado Resorts is positioned for near- and long-term success and the creation of value for our shareholders.”
The company’s stock will continue to trade on the NASDAQ under the symbol “ERI.” Trading was largely steady on the news.
Eldorado acquired all outstanding shares of Isle of Capri for $23.00 or 1.638 shares of Eldorado common stock. The transaction projects to be immediately accretive to Eldorado’s free cash flow and diluted earnings per share.
“The financing for the transaction was executed at favorable rates that should permit us to generate more incremental annual free cash flow than we originally expected,” said Tom Reeg, President and Chief Financial Officer. “With our experienced management team, operating discipline and return-focused approach to capital expenditures, we believe the acquisition represents another meaningful opportunity for Eldorado Resorts and our existing and new shareholders.”
In a separate news release, Eldorado announced the appointments of Anthony L. Carano as Chief Operating Officer and Executive Vice President and Edmund L. Quattman as Chief Legal Officer. Quattman had served in the same role at Isle of Capri since 2008.
“We are delighted to announce Anthony’s promotion and Ed’s appointment to the Eldorado team following our acquisition of Isle of Capri and the addition of its twelve casino–resorts to the Company’s property portfolio,” said Gary Carano on the appointments. “As we have meaningfully increased the scale of our regional gaming platform, Anthony’s detailed knowledge of our operations, and our operating disciplines that focus on margin enhancement and customer service, will be invaluable in managing the operations of our properties and the successful integration of the acquired Isle of Capri properties.”
