Eldorado Resorts To Take Over Caesars Entertainment

caesarsEldorado Resorts, Inc. (NASDAQ: ERI), an American hotel and casino entertainment company, is taking over Caesars Entertainment Corporation (NASDAQ: CZR)’s renowned land-based casino.

Eldorado will acquire all of the outstanding shares of Caesars for a total consideration of approximately $17.3 billion.

At separate Special Meetings of Stockholders on November, 15, 2019, the respective stockholders of the two companies approved certain actions in connection with the acquisition. The proposed transaction is expected to be completed in the first half of 2020 and remains subject to the receipt of all required regulatory approvals, and other closing conditions.

The deal will combine two leading gaming companies with complementary national operating platforms, brands, strategic industry alliances, and a collective commitment to enhancing guest service and shareholder value. The combined company will provide its guests with access to approximately 60 domestic casino–resorts and gaming facilities across 16 states.

Eldorado is a casino entertainment company that currently owns and operates twenty-six properties in twelve states, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, and Ohio. In aggregate, its properties feature approximately 23,000 slot machines and VLTs and approximately 650 table games, and over 12,000 hotel rooms.

Launched in Reno, Nevada, in 1937, Caesars is a diversified casino-entertainment company which operates casinos on three continents. The resorts operate primarily under the Harrah’s®, Caesars® and Horseshoe® brand names. Caesars also owns the London Clubs International family of casinos. Caesars currently owns and operates 34 casinos and resorts in Kentucky, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada and New Jersey. Domestically, Caesars properties feature approximately 48,000 slot machines and VLTs and approximately 3,000 table games, and over 39,000 hotel rooms.

The experts’ opinion on the deal

Eilers & Krejcik Gaming analyst Matt Kaufman claimed that the deal seems to have extremely negative consequences in the aftermath. ‘In the short term, the deal is beneficial to Caesars shareholders, but in the long term, I am pessimistic that this will benefit the business,’ he said.
The expert believes that Eldorado’s business approach will be ineffective in highly competitive markets. ‘Eldorado’s top management wants to decentralize power in the company and give managers on individual sites more authority. This is a completely different approach compared to how Caesars and most of the leading competitors work today. Allowing each casino to work more independently is a much more old-fashioned approach that is unlikely to work out in hyper-competitive markets such as Las Vegas,” the expert explained.

Shortly before that, Eldorado CEO Tom Rig said that he does not plan to expand the business internationally and wants to focus on the US market. He noted that he planned to continue Caesars’ collaboration with major betting companies such as the Stars Group and William Hill in order to gain a share in the emerging betting market in the USA.

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