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Sunday, June 23, 2019

=Caesars Entertainment (CZR) to be acquired by Eldorado Resorts (ERI) for $8.7B or $13/sh

  • Caesars’ shares closed on Friday at $9.99. The company, which emerged from bankruptcy in 2017, operates casinos with the Harrah’s and Horseshoe brands. It had 53 properties in 14 U.S. states and five countries outside the United States at the end of December.


(Bloomberg) -- Eldorado Resorts Inc. agreed to buy Caesars Entertainment Corp. for about $8.7 billion in cash and stock, according to a person familiar with the situation.
The deal values Caesars at about $13 a share, according to the person, who asked not to be identified because the information isn’t public. Including assumed Caesars debt, the transaction would be valued at about $18 billion. The combined entity will be split almost equally between shareholders of both companies, the person said, adding that the deal will be announced Monday.
The price represents a 30% premium to Caesars’s close on Friday. Eldorado had a market value of about $4 billion as of Friday.
Caesars had been pushed by activist billionaire Carl Icahn, its biggest shareholder according to data compiled by Bloomberg, to consider a sale. Earlier discussions had focused on a deal that would have valued Caesars at $11 a share, a person familiar with those talks had said.
Eldorado shares have risen 17% in the past year, compared with a 12% decline in Caesars’ stock. The S&P Supercomposite Casinos & Gaming Index, which tracks the performance of nine stocks including the two companies, slumped about 20%.
Caesars shares are trading at 24 times reported earnings, while Eldorado is valued at 33 times, according to data compiled by Bloomberg.
Officials from Eldorado and Caesars declined to comment on the report. Reuters earlier reported the acquisition plan.

The 550 foot-tall (167.6 m) High Roller observation wheel, the tallest in the world, is the centerpiece of the $550 million Linq project, a retail, dining and entertainment district by Caesars Entertainment Corp, in seen in Las Vegas, Nevada April 9, 2014. 

Eldorado wasn’t Caesars’ only suitor. Golden Nugget owner Tilman Fertitta proposed merging his restaurant and casino empire with Caesars last year, but was rejected by Caesars.
Caesars, whose properties include the flagship Caesars Palace and the Harrah’s chain, is still coping with the fallout of a 2008 leveraged buyout led by Apollo Global Management LLC and TPG that left it with a mountain of debt. The company completed a bankruptcy of its largest unit two years ago that brought in new board members and shareholders, including distressed-debt investors. Apollo and TPG have sold their shares.
Eldorado, which dates back to a single casino opened in Reno, Nevada, in 1973, has grown exponentially in recent years under the direction of Tom Reeg, who is now chief executive officer. The company in recent years acquired MTR Gaming Group Inc. and Isle of Capri Casinos, and last year added Tropicana Entertainment Inc., which was controlled by Icahn.
The business, which still counts the founding Carano family as its largest shareholder, now has 26 casinos in 12 states.

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