The name Eldorado Resorts has now been relegated to the gaming industry’s history books.
The Reno-based company’s $17.3 billion acquisition of Caesars Entertainment closed Monday, creating the largest casino company in the U.S. with 55 properties worldwide in 16 states.
The new company will retain the Caesars Entertainment name and stock symbol and be overseen by the management team from Eldorado Resorts.
“We are pleased to have completed this transformative merger, thus making us the premier leader in gaming and hospitality,” Caesars CEO Tom Reeg, who had been CEO of Eldorado, said in a statement. “We look forward to executing on the numerous opportunities ahead to create value for all stakeholders. Additionally, we are pleased to welcome all of our team members to the combined company, and we look forward to implementing all of the strategic initiatives that will position the company for continued growth.”
The buyout also includes Caesars properties in the United Kingdom, Egypt, and Canada.
The merger was first announced in June 2019 and took more than a year to close due to the approval process required by more than a dozen state gaming regulatory bodies and the Federal Trade Commission. The coronavirus pandemic, with shut the nation’s gaming industry for nearly three months, slowed the approval.
The FTC required the companies to sell casinos in Lake Tahoe, Nevada, and Shreveport, Louisiana, to avoid any federal antitrust issues.
Approvals over the last two weeks by gaming regulators in Nevada, Indiana, and New Jersey solidified the transaction.
Caesars operates eight hotel-casinos on the Las Vegas Strip – including Caesars Palace and Harrah’s Las Vegas. Company executives told Nevada gaming regulators they plan to sell one or two of the resorts.
Casino sales will be part of Caesars’ operating plan going forward. Indiana gaming authorities are requiring Caesars to sell three of its five casinos in the state. The former Eldorado sold casinos in Kansas City, Missouri, and Vicksburg, Mississippi earlier this year to Rhode Island-based Twin River Worldwide Holdings. Twin River is also acquiring Eldorado Shreveport and the operations of MontBleu Resort Casino in Lake Tahoe for a combined $155 million. The company also agreed to buy Bally’s Atlantic City for $25 million.
The former Eldorado had nearly $3 billion in debt on its books at the end of March. That figure jumps to almost $13 billion with the merger closing.
However, the roughly $12 billion in long-term casino lease payments Caesars owes to real estate investment trusts Gaming and Leisure Properties and VICI Properties company increases the company’s total debt load to some $25 billion. Analysts said the investment community and common accounting principles count leases as debt.
As part of the merger, sports betting operator William Hill US will take over all of the Caesars-operated sportsbooks in Nevada, including Caesars Palace. The former Eldorado has a partnership agreement with the American subsidiary of UK-based sports betting giant William Hill. In 2019, Eldorado gained a 20% ownership stake in the business in exchange for a 25-year deal to operate sports betting in the company’s casinos where the activity is legal.
Caesars sale long-rumored
Reports of a potential sale of Caesars Entertainment – a company that emerged by 30-month bankruptcy reorganization in 2017 – began surfacing in late 2018 when corporate raider Carl Icahn began acquiring large stakes in the company, eventually controlling more than 20% percent of the company’s voting stake. He eventually landed three seats on the Caesars board, installed longtime gaming executive Tony Rodio as CEO, and pushed for a sale or merger of the company.
Eldorado Resorts Executive Director of the Board Gary Carano – who is now the executive chairman of the new Caesars board – told Nevada gaming regulators the company first looked at acquiring Caesars in 2018.
Icahn will be the largest single shareholder, with more than 10% of the combined company.
Shareholders of both Eldorado and Caesars approved the deal last November.
The former Eldorado purchased the former Caesars stock at $12.30 per share, using $8.70 in cash and the remainder in Eldorado shares. Former Eldorado shareholders own 56% of the merged company.
New board
Eldorado provided six board members to the combined company: Carano, Reeg, David Tomick, Frank Fahrenkopf Jr., Michael Pegram, and Bonnie Biumi.
Former Caesars directors joining the newly combined companies board are Keith Cozza, Jan Jones Blackhurst, Don Kornstein, Courtney Mather, and James Nelson. Cozza is CEO of Icahn Enterprises, Nelson is a board member of Icahn Enterprises, and Mather is a fund manager for Icahn Capital.
Jones Blackhurst, a former mayor of Las Vegas, joined the Caesars board in October 2019 after she gave up her corporate position as executive vice president, public policy & corporate responsibility that same month. She spent 20 years as an executive with Caesars.
She will head a board committee for the new Caesars overseeing social responsibility.
Rodio will remain with new Caesars as a strategic advisor to Reeg and assist with the company’s efforts to win a casino license in Danville, Virginia, help with the expansion of Harrah’s New Orleans, and advise on renovations at Tropicana Atlantic City.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
