Eldorado Resorts to Combine with Caesars Entertainment in $17.3B Deal

On Jun 24, 2019

Eldorado Resorts, Inc. and Caesars Entertainment Corporation have entered into a definitive merger agreement to create the largest U.S. gaming company. The proposed $17.3 billion transaction will combine two leading gaming companies with complementary national operating platforms, strong brands, and strategic industry alliances.

Upon completion of the transaction, the combined company will retain the Caesars name to capitalize on the value of the global brand. The new company will have approximately 60 domestic casino-resorts and gaming facilities across 16 states, including Caesars, Harrah’s and Bally’s properties in Atlantic City, where Caesar’s Entertainment employs approximately 8,700 workers.

Eldorado will acquire all of the outstanding shares of Caesars for a total value of $12.75 per share, consisting of $8.40 per share in cash consideration and 0.0899 shares of Eldorado common stock for each Caesars share of common stock based on Eldorado’s 30-calendar day volume weighted average price per share as of May 23, reflecting total consideration of approximately $17.3 billion, comprised of $7.2 billion in cash, approximately 77 million Eldorado common shares and the assumption of Caesars outstanding net debt (excluding face value of the existing convertible note). Caesars shareholders will be offered a consideration election mechanism that is subject to proration pursuant to the definitive merger agreement. Giving effect to the transaction, Eldorado and Caesars shareholders will hold approximately 51% and 49% of the combined company’s outstanding shares, respectively.

VICI Properties, Inc. and Eldorado have entered into a master transaction agreement in connection with the acquisition of the real estate of three assets and amendment of existing leases and right of first refusals. Furthermore, in connection with the transaction, the parties have agreed to the following:

VICI will acquire the real estate associated with Harrah’s Resort Atlantic City, Harrah’s Laughlin Hotel & Casino, and Harrah’s New Orleans Hotel & Casino for approximately $1.8 billion. The properties will be added to an existing master lease and will have an initial annual rent of approximately $154 million. The proceeds from this transaction represent a rent multiple of 11.75x.

Tom Reeg, chief executive officer of Eldorado, comments, “Eldorado’s combination with Caesars will create the largest owner and operator of U.S. gaming assets and is a strategically, financially and operationally compelling opportunity that brings immediate and long-term value to stakeholders of both companies. 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 U.S. gaming market and will marry best-of-breed practices from both entities to ensure high levels of customer satisfaction and significant shareholder returns.

“As with our past transactions, we have a detailed plan for significant synergy realization. Relative to our prior acquisitions, the combination with Caesars presents attractive incremental revenue synergy opportunities as we plan to strengthen Caesars Rewards, the industry’s leading player loyalty and CMS database, and combine it with Eldorado’s to market to over 65 million rewards customers nationally. Additionally, the transaction bears benefits beyond the strategic merits of the combination with Caesars in isolation. Our agreement with VICI favorably positions both platforms by enhancing the value of our combined company’s assets and further solidifies the growth profile of VICI,” Reeg says.

The combined company’s board of directors will consist of 11 members, six of whom will come from Eldorado’s board of directors and five of whom will come from Caesars board of directors.

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