Eldorado to merge with Caesars

Eldorado has agreed to buy Caesars Entertainment for US$8.5 billion and the merger will create the largest US gaming operator.

US.- Eldorado Resorts, Inc and Caesars Entertainment Corporation have announced that that they have entered into a definitive merger agreement. The merger between the companies will create the largest US gaming company.

The companies revealed that they agreed on an equity value of US$12.75 a share — in a mix of cash and Eldorado stock — representing a premium of approximately 28% to Caesars’s June 21 closing price. With debt included, the deal is worth approximately US$17.3 billion. After the announcement of the deal, Caesars’ shares increased 13% to US$11.25 in pre-market trading, while Eldorado fell 6.8%. Giving effect to the transaction, Eldorado and Caesars shareholders will hold approximately 51% and 49% of the combined company’s outstanding shares, respectively.

Moreover, the companies revealed that upon completion of the transaction the combined company will retain the Caesars name to capitalise on the value of the iconic global brand and its legacy of leadership in the global gaming industry. The new company will continue to trade on the Nasdaq Global Select Market.

The agreement includes that VICI Properties and Eldorado agreed that the former 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 US$1.8 billion.

Tom Reeg, Chief Executive Officer of Eldorado, said: “Eldorado’s merger 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 realisation. 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 favourably positions both platforms by enhancing the value of our combined company’s assets and further solidifies the growth profile of VICI.

“We intend 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.”

Tony Rodio, Chief Executive Officer of Caesars, added: “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. The incorporation of Caesars Rewards has produced strong results at the recently acquired Centaur properties. By joining forces, we believe the new Caesars will have a key position to compete in our dynamic industry.”

Ed Pitoniak, Chief Executive Officer of VICI, said: “VICI is honoured and excited to be integrally involved with Eldorado in this transformative transaction. As a REIT, we seek to partner with operators who have the most powerful, valuable and enduring relationships with the end users of our real estate. Under Tom Reeg’s leadership and front-line focus, the combination of Eldorado and Caesars will yield the most compelling guest experiences and network effect in American gaming.”

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