Caesars Entertainment Purchased for $22.2 Billion AUD
Eldorado Resorts, an American-based casino operator, has announced their upcoming purchase of Caesars Entertainment in a A$22.2 billion deal. Eldorado is expected to pay A$10.9 billion in cash and shares, while also taking on the substantial debt of the purchased company.
This is just the latest acquisition by a company looking to aggressively compete with the likes of Wynn Resorts and Las Vegas Sands. These tactics have paid off so far, as their stock price is 12 times what it was just five years ago. Now that they’ve added the Horseshoe, Bally’s, and Harrah’s brands, their gambling empire will extend to 60 casino-resorts across 16 American states.
The day before the deal went public, Eldorado sold one casino in West Virginia and another two in Missouri for a total of A$493 million. Analysts saw this as a move to alleviate possible anti-trust concerns, as well as generate a substantial sum for a stock and cash offer.
On the heels of this announcement, Eldorado CEO Tom Reeg released the following statement, “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.”
Caesars Entertainment appears equally enthusiastic, with Chairman Jim Hunt delivering the following quote: “”This announcement is the culmination of a thorough evaluation by the Caesars Board of Directors. The Board unanimously concluded that the combination of these two companies creating an even stronger entity is a decision for our shareholders’ consideration and vote for immediate and ongoing value.”
A Vegas Legend on the Auction Block
The most notable property involved in the upcoming sale is Caesars Palace, the legendary hotel and casino that’s become a Las Vegas landmark and an enduring name in land-based gambling. Known for evoking the opulence of the Roman Empire and attracting high rollers, it opened for business in 1966 (firmly under the control of the mafia) and started the era of the lavish casino.
Since then, it’s hosted iconic entertainment figures ranging from Frank Sinatra to Shania Twain, and the gaming facilities have grown substantially from the original 30 gaming tables and 250 pokies. Fortunately, there are no plans for a name change, so the Caesars Palace brand should continue to delight visiting Australian gamblers (and everyone else) for generations to come.
Carl Icahn Works His Magic
Despite owning one of the most recognizable brands in casino gambling, Caesars Entertainment has suffered through a series of financial problems. They only emerged from bankruptcy in 2017, and they still carry billions of dollars in debt. This move should get them headed in the right direction, though, and much of the credit belongs to investor Carl Icahn.
After gaining a 14.75% stake in Caesars (which eventually grew to 28.5%), Icahn was given three seats on the 11-person board of directors and allowed to hand pick the next CEO. He personally championed the idea of a sale, seeing it as the best way to eliminate much of the debt that had plagued the gambling titan.
Eldorado was an early frontrunner to make the purchase, thanks in part to previous business dealings with Icahn. The investor’s holding company formerly owned Tropicana Entertainment, which was sold to Eldorado for A$2.4 billion in 2018.
The New York Post reported that board members were becoming frustrated with Icahn’s continual negotiations to drive up the sale prince, but eventually the two companies agreed on the A$22.2 billion figure. This number must have pleased Icahn, as he released a statement saying, “It is rare that you see a merger where, because of the great synergies, ‘one plus one equals five’. I look forward to seeing our investment prosper.”