Eldorado Resorts and Caesars Entertainment have agreed to a merger valued at $18 billion, sources told Reuters News Service on Sunday.
Reuters reporter Greg Roumeliotis wrote the deal is expected to be announced Monday morning. The merger is a cash and stock deal that includes debt, people familiar with the matter told Reuters.
The agreement comes three months after Reuters reported that Caesars had agreed to give Eldorado access to its books under pressure from billionaire investor Carl Icahn, who earlier this year was awarded three seats on Caesars’ board. Icahn, the 83-year-old corporate raider, controls a 28.5 percent in Caesars with swaps.
In April, Icahn named Tony Rodio as Caesars CEO. Rodio was CEO of Ichan’s Tropicana Entertainment that was sold to Eldorado last year.
A week ago, Reno-based Eldorado said it was selling three of its regional casinos in two states for $385 million to VICI Properties and Century Casinos.
Analysts speculated the transaction – which includes two casinos in Missouri – foreshadowed a merger between Eldorado and Caesars.
A deal between Eldorado and Caesars is fraught with anti-trust issues, analysts said. Eldorado currently operates 26 casinos in 12 states; Caesars operates close to 40 casinos in 13 states, including nine resorts on or near the Las Vegas Strip.
Deutsche Bank gaming analyst Carlo Santarelli, in a May 29 research report, cited five states with jurisdictions where the Federal Trade Commission might throw out a roadblock. Eldorado’s planned sale of the two Missouri could alleviate the issue with one state.
Other markets that Santarelli cited as troublesome in an Eldorado-Caesars marriage were Reno/Lake Tahoe, Laughlin in Nevada, Atlantic City, Indiana, and Louisiana.
Now the third largest regional casino operator, Eldorado has been one of the most active gaming companies in the acquisition market over the last two years. In 2017, Eldorado acquired Isle of Capri Resorts for $1.7 billion, and last year, the company bought seven casinos from Tropicana Entertainment for $1.85 billion in a joint venture with real estate investment trust Gaming and Leisure Properties, and added the Grand Victoria Casino in Elgin, Illinois for $327.5 million.
The deal values Caesars at close to $13 a share, according to Reuters sources. The combined company’s ownership would be split roughly between Eldorado and Caesars shareholders, the sources said.
Caesars’ shares closed on Friday at $9.99. The company, which emerged from bankruptcy in 2017, operates casinos under several brands, primarily Harrah’s, Caesars, and Horseshoe.
The sources asked Reuters not to be identified because the matter is confidential. An Eldorado spokesman told the news service the company did not comment on rumors or speculation. Caesars did not immediately respond to requests for comment.
The combination of the two companies would create a serious competitor to larger casino industry players, such as Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International.
Eldorado has a market value of $4 billion. It also had long-term debt at the end of March of $3.1 billion.
Reuters contributed to this report.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
