Caesars Entertainment Corp. and Eldorado Resorts are inching closer to combining their operations, sources familiar with the ongoing merger discussions said. Sources believe that a cash-and-stock deal could be announced next week as long as talks do not break down.
The New York Post reported Thursday that Caesars, prompted by its largest stakeholder – New York activist investor Carl Icahn, has recently rejected an offer made by Eldorado. According to sources, the owner of Caesars Palace and the Harrah’s and Horseshoe casino brands deemed that original offer “underwhelming.”
A separate source has told The Post that Eldorado’s cash-and-stock bid was worth around $10.50 per share. The company closed at $9.13 a share on Thursday for a total market capitalization of more than $5.72 billion.
The two companies are believed to have been ironing out details about a new offer since the $10.50 one was rejected. According to a source, the deal is “very close” to being made public and that an announcement could be expected as early as next week.
Other Bidders
Reports about the potential sale of Caesars or its combination with another casino operator began floating around this past fall when it emerged that Texas businessman Tilman Fertitta, who owns the Golden Nugget casino chain, had made a bid to combine Caesars with his own casino and hospitality business. The Las Vegas gaming giant had declined the offer.
Caesars’ largest shareholder, Carl Icahn, has been pushing for the company to sell itself or merge with a similar entity since he began building a stake in it in early January. The New York investor, who now holds a 28.5% stake in the major casino operator with swaps, has previously said that a combination of some sort is the best path forward for Caesars.
The company was reported to have entered merger talks with Eldorado Resorts in March. It became known back then that Caesars has provided its rival with access to its financial data so that the latter could conduct due diligence on a potential deal.
News outlets reported at about the same time that Tilman Fertitta was preparing another offer for Caesars. However, according to sources, the businessman has not made a bid in the past several months, despite informing Caesars about his interest.
Phil Ruffin, the owner of Treasure Island, told the Las Vegas Review-Journal in May that he was interested in buying Caesars properties on the Las Vegas Strip. The businessman went on to say that he could pay $1 billion in cash and raise additional funds in debt for a hotel and casino resort owned by Caesars. According to Mr. Ruffin, the Las Vegas hotel and casino giant had some “great locations” on the legendary Strip.
Who Will Lead a Combined Caesars/Eldorado Entity?
According to sources, Eldorado’s management will take up the reins of the combined business, in case a deal is finalized. Tom Reeg stepped in as CEO of Eldorado in 2018. He completed successfully the company’s acquisition of Tropicana Entertainment from Mr. Icahn. The deal enhanced Eldorado’s financial performance significantly.
Sources have told The Post that Mr. Reeg is highly respected by Mr. Icahn, which could mean that he could receive a blessing from the outspoken New York activist investor to step in at the helm of a combined Caesars/Eldorado business.
William Hill and Caesars Could Eventually End Up Together
Last weekend, The Sunday Times broke the news that William Hill and Caesars engaged in discussions over a potential £6 billion merger last fall. The deal eventually fell apart as the two parties failed to agree on a viable price.
A combination of Caesars and Eldorado would eventually bring the casino operator and the British bookmaker together in a way.
Last September, William Hill’s US division and Eldorado signed a 25-year deal that made the former the exclusive provider of retail and digital betting services and online gambling services for the casino operator. Under the terms of the deal, Eldorado obtained a 20% stake in William Hill US, while the latter gained access to Eldorado’s portfolio of properties and customer base of more than 23 million people.
A successful merger between Caesars and Eldorado would further increase William Hill’s US presence at a time when more and more states are venturing into the lucrative sports betting field.
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