The largest merger/acquisition event of the year in iGaming has happened: the long-awaited sale of Caesars Entertainment is a done deal! The Las Vegas giant and Eldorado Resorts have officially confirmed the definitive merger agreement between the two brands, creating a new market leader in the US gambling sector.

The total value of the purchase is $17.3 billion! That is $7.2 bn in cash and 77m Eldorado common shares. According to the minutiae of the deal, Eldorado will acquire all of Caesars' shares for $12.75 per share – that's $8.40 per share in cash plus 0.0899 shares of Eldorado common stock – as well as their net debt.

The Deal of the Century?

The transaction is expected to be completed in the first half of 2020...

...as it needs to be subjected to regulatory approval. It will, however, increase the scale of business and create geographical diversification, achieving, along the way $500 million of synergies in the first year.

This would afford Eldorado and Caesars shareholders circa 51% and 49% of company's combined outstanding shares.

The deal will see the iconic Caesars' global brand retained and utilized. The new company will have their headquarters in Nevada's Reno, but will keep a heavy presence in Las Vegas. The combined entity will be led by Eldorado Chairman, Gary Carano, Chief Executive Officer, Tom Reeg, Chief Operations Officer, Anthony Carano, Chief Financial Officer, Bret Yunker, and Chief Learning Officer, Edmund Quatmann.

Initial Remarks

In their first statements after the historic deal was confirmed, Caesars' CEO, Toby Rodio, said:

“We believe this combination will build on the accomplishments and best-in-class operating practices of both companies. I’m familiar with Eldorado and its management team, having worked with them on a previous transaction, and I look forward to collaborating with them to bring our companies together. We are excited to integrate Caesars Rewards with the combined portfolio.”

Rodio added that the incorporation of the Caesars Rewards programme has produced strong results at the Centaur properties that were recently purchased. He concluded by saying that...

...by joining forces, the new Caesars will be well-positioned to compete in this dynamic industry.

Covering All Major US Markets

The new entity's CEO, Tom Reeg, confirmed that the Eldorado/Caesars combination will produce the “largest owner and operator of US gaming assets,” strategically and financially compelling to bring immediate and long-term value to stakeholders.

“Together, we will have an extremely powerful suite of iconic gaming and entertainment brands, as well as valuable strategic alliances with industry leaders in sports betting and online gaming. The combined entity will serve customers in essentially every major US gaming market, and will marry best-of-breed practices from both entities to ensure high levels of customer satisfaction and significant shareholder returns.”

Reeg went on to explain that, in the steps that follow...

...the company intends to allocate the significant free cash flow from the combined company to reduce leverage while investing to improve the customer experience across the platform. “We could not be more excited about the future as we bring together two industry leaders that will generate significant opportunities for our employees, customers, partners and shareholders.”

Finishing Touches

As an integral part of this deal...

...there is a $3.2 billion transaction entered alongside Vici Properties. It will provide access to about 60 casino venues, resorts and gaming properties in 16 US states. Vici will become a sole owner of land and real estate assets belonging to Harrah's New Orleans, Harrah's Laughlin and Harrah's Atlantic City.

The new company will also win the right of first refusal for the sale of whole assets of sale-leaseback transactions for two venues in las Vegas and Baltimore's Horseshoe Casino.

Source:

“Eldorado to Combine With Caesars Creating the Largest owner and Operator of U.S. Gaming Assets”, ir.eldoradoresorts.com, June 24, 2019.