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Eldorado & Caesars Finally Merging

Mia Gardner | 25 Jun 2019

It appears as if the long-anticipated matrimony of Caesars Entertainment and Eldorado Resorts is actually going to happen. Speculation has been running rife ever since it was announced that Eldorado had been singled out as a credible buyer in the $18 billion merger deal. This happened in the fall of 2018. Before that, many others had expressed interest in accumulating a slice of the Caesars pie, including Golden Nugget owner and billionaire Tilman Fertitta, and the owner of Treasure Island, namely Phil Ruffin.

Eldorado is a giant group, owning a total of 26 casinos in 12 US states. It does not currently own any casinos in Las Vegas. Once the deal has been signed, sealed and finalised, this will obviously change. The combined Caesars / Eldorado endeavour will be the ultimate making of one of the biggest casino operators in the US. The expectation at this stage is that the end-result will be a situation of more-or-less joint ownership between Caesars and Eldorado.

Agreeing On Price Was A Stickler

Major Caesars investor Carl Icahn made news earlier on when it was revealed that he had put the Caesars group before a specific ultimatum: either merge or sell. According to Icahn, this is the only remaining salvation for the group. He had also been involved in the share-price negotiations all throughout, and had demanded that the board of directors lower their expectations in terms of share-price, having pointed out at the time that they were charging too much for what they were able to offer in terms of value.

The $18 billion price tag puts the shares at roughly $13 a share. This is by no means a poor offer, especially when considering $8.8 billion in liabilities. The initial $10.50 per share that Eldorado had supposedly offered up rather willingly was obviously turned down by Caesars. But now that a mutually agreed-upon settlement has been reached, the merger process is expected to progress quickly from here on out.

The Makings Of A Giant

What had confirmed to speculators that Eldorado was indeed getting ready to buy the mentioned shares, was the fact that it had recently entered into sale agreements with Century Casinos and VICI Properties, respectively, that would see it sell off its Missouri (2 casinos) and West Virginia (1 casino) investments.

If the merger were to be seen through all the way to the end, and at this stage it appears to be headed that way, the combined business will officially become the 4th largest casino group in the US.

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