93°F
weather icon Clear

Could Eldorado Resorts possibly acquire the larger Caesars Entertainment?

It isn’t often that David takes Goliath, but that’s a possible scenario on the Strip with Reno-based Eldorado Resorts Inc.’s prospect of acquiring Caesars Entertainment Corp.

Analysts say Caesars could go for an estimated $7.4 billion, based on the proposed share price and the number of shares outstanding.

The possibility of such a deal has been swirling around ever since corporate raider Carl Icahn acquired about 18 percent of the company’s stock and holds enough influence on its board of directors to call the shots.

His calls for the company to sell ratcheted up again this week with reports that a sale could occur by the end of the month — or that it could be completely trashed if the financing doesn’t hold up.

Analysts are envisioning a cash and stock deal of around $11 a share. Icahn reportedly rejected an offer of $10.50 a share as too low.

If a deal comes about, it could dramatically alter the Strip landscape.

Eldorado, founded by Reno’s Carano family and now under the direction of CEO Thomas Reeg, has long coveted a spot on the Strip. Last year, it completed the acquisition of Tropicana Entertainment and entered the Southern Nevada market with the Tropicana Laughlin. (It isn’t the same company that owns the Tropicana on the Strip.)

Acquiring Caesars could get Eldorado the Strip address it wants. But would it keep the flagship Caesars Palace or sell it, a suggestion offered by Las Vegas-based analyst John DeCree of Union Gaming? Certainly Caesars Palace would generate a tidy sum that could go a long way toward Eldorado’s investment goals.

Eldorado could continue to hold other Las Vegas assets, and keep Caesars Entertainment’s strong Caesars Rewards database.

Caesars investors could finally escape the company’s lengthy history of undervalued share prices and the bitter taste of the company’s two-year trip to bankruptcy court.

In a report to investors, J.P. Morgan analyst Daniel Politzer suggested that the merged Eldorado-Caesars company could function with the efficiencies Eldorado has used while becoming the nation’s third-largest regional gaming company with 26 casino operations in 12 states.

Politzer envisions Eldorado realizing $500 million in synergies being achieved by using the size of the pro forma entity to optimize a Las Vegas-centric hub-and-spoke business structure, with the hub getting smaller (selling some of Caesars’ Las Vegas Strip assets) and putting in more spokes — new regional properties.

“Under this scenario, we could see the combined company having three to five Strip assets, vs. nine currently, that would span customer segments (luxury via Caesars Palace, one or two mid-tier properties, and maybe one or two economy properties),” Politzer wrote.

If that happens, what would the new company give up? The Caesars universe in Las Vegas includes Caesars Palace, The Linq Hotel, The Cromwell, Bally’s, Paris Las Vegas, Harrah’s, Planet Hollywood Resort, Flamingo and the Rio, long rumored to eventually be booted from the company.

Who would be the suitors? Tilman Fertitta has flirted with attempting his own bid for Caesars. Phil Ruffin, who has carved a nice Strip niche with TI, could be interested. Would Boyd Gaming attempt to make a Strip comeback after closing and demolishing the Stardust in 2006 and jettisoning its Echelon dream by selling the land to Genting Holdings, which is now building Resorts World Las Vegas there?

An Eldorado-Caesars deal would present some additional regulatory roadblocks, with likely divestitures necessary in Atlantic City, New Jersey, where a merged company would control 41 percent of gross gaming revenue; Missouri, about a 33 percent share; Iowa (27 percent); and possibly Illinois (30 percent). There’s also slight overlap in Reno-Lake Tahoe and in Laughlin.

Analyst Barry Jonas of SunTrust Robinson Humphrey, Inc., is another who suspects a deal between Eldorado and Caesars could be imminent.

“I think they have a very capable management team that’s loved by the Street,” Jonas said. “They’re very effective and really able to sort of push the envelope. It challenges a lot of the normal conventions around marketing and promotions and I think if anyone’s up to the challenge, it’s Tom Reeg and Eldorado.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Popeyes Spicy Chicken Sandwich Review
Janine Blake of Las Vegas gives her review of the new Popeyes Spicy Chicken Sandwich at the restaurant’s location on west Bonanza Road on Thursday, Aug. 22, 2019,
SuperZoo 2019 takes over Mandalay Bay in Las Vegas
SuperZoo 2019 show for pet retailers brought pet products of all description to the Mandalay Bay Convention Center in Las Vegas. (Heidi Knapp Rinella/Las Vegas Review-Journal)
MSG Sphere at The Venetian to cost $1.2B plus
Scheduled to open in 2021, it is expected to be busier than Madison Square Garden in New York. (Michael Quine/Las Vegas Review-Journal)
Favorite products from SuperZoo 2019
Some of the fun and interesting pet products on display at the SuperZoo in Las Vegas at the Mandalay Bay Convention Center. (L.E. Baskow/Las Vegas Review-Journal)
MAGIC Convention Day 3
The fashion trade show MAGIC, held Monday through Wednesday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
MAGIC Las Vegas - Day One
The biannual MAGIC convention show opened Monday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
Allegiant celebrates naming deal with tailgate party
Allegiant Air employees celebrate with a tailgate party after the company’s naming deal with the Raiders for the new Las Vegas stadium.
Nevada's sportsbook operators welcome competition
Sportsbook operators from near and far are looking to get into in the established Nevada market, experts say. (Las Vegas Review-Journal)
Get a first look of MSG Sphere construction in Las Vegas
Representatives of The Madison Square Garden Company give the first glimpse of progress Tuesday of the under-construction MSG Sphere — a first-of-its-kind performance venue with high-tech audio and visual capabilities.
There's a new place to play board games in Las Vegas
Matt Smiciklas, co-owner of Boarding School Games, talks about the new Las Vegas business that he co-owns with Emily Labejof. Dedicated tabletop gamers can choose from more than 500 games to play for free in-store. The doors open to the public Saturday, July 20, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Renovations at the STRAT
Analysts say the $140 million renovation project at The STRAT, formerly the known as the Stratosphere, could help the hotel-casino compete with the evolving north side of the Las Vegas Strip. (Bailey Schulz/Las Vegas Review-Journal)
SLS Las Vegas will become Sahara Las Vegas
Owner Alex Meruelo announced during a special event at the SLS Las Vegas that the hotel-casino will become Sahara Las Vegas in its next iteration. Meruelo said $150 million dollars will be spent to renovate the current property. (Heidi Fang/Las Vegas Review-Journal)
Aircraft hinge maker moves to "business friendly" Nevada
Doug Silva, president of Aircraft Hinge, Inc. in Las Vegas, makes every type of hinge for every type of airplane. Silva talks about his company and why he moved it to Nevada. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Daytime fireworks mark the opening of Encore Boston Harbor
The opening of the $2.6 billion Encore Boston Harbor in Everett, Mass. included a three-minute fireworks show launched by Fireworks by Grucci Sunday, June 23, 2019. (Rick Velotta/Las Vegas Review-Journal) @RickVelotta
Elaine Wynn talks about the opening of Encore Boston Harbor
Elaine Wynn, co-founder and largest shareholder of Wynn Resorts, talked during opening festivities of the $2.6 billion Encore Boston Harbor in Everett, Mass. Sunday, June 23, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
People line hours ahead of opening for Encore Boston Harbor
Guests arrive as much as 17 hours early for the 10 a.m. opening of the $2.6 billion, 671-room resort in Everett, Mass. Sunday, June 23, 2019. (K.M. Cannon/Las Vegas Review-Journal) @reviewjournal.com
Allegiant Discusses Investments In Golf Course Software And Game Rooms - Video
Allegiant Discusses Investments In Golf Course Software And Game Rooms.
Crews working 24/7 to complete Circa downtown - VIDEO
Owner Derek Stevens goal is to open the doors to the 1.25 million-square-foot project by December 2020. (Michael Quine/Las Vegas Review-Journal)
Golden Knights Marc-Andre Fleury sells Las Vegas home - VIDEO
Golden Knights goaltender Marc-Andre Fleury has sold his custom home Southern Highlands home in Las Vegas for $2.3 million.
Las Vegas Strip resorts slow to welcome Alexa, Google Home Hub
Alexa, where are you? Smart home and hospitality technology was big at CES in early January. Amazon and Google promoted their voice-activated speakers Alexa and Google Home Hub. Hospitality executives have called the speakers the industry’s future. Yet for all the hype, the revolution is unfolding at a cautious pace on the Strip as well as in other major U.S. hospitality markets. Hotels are focusing their consumer-facing technology investments on adding streaming capabilities, like Netflix, and enhancing their mobile apps, a December report by Hospitality Technology showed. Voice-enabled technology is 10th on that priority list.
What is MGM 2020
MGM Resorts International announced its MGM 2020 plan in January, The plan would improve cash flow by $200 million annually by the end of 2020 and an additional $100 million by the end of 2021. 1,070 jobs were cut as part of the cost-cutting initiative. 881 of those were Las Vegas employees, mostly in management or mid-management positions. Jim Murren
What is MGM 2020
MGM Resorts International announced its MGM 2020 plan in January, The plan would improve cash flow by $200 million annually by the end of 2020 and an additional $100 million by the end of 2021. 1,070 jobs were cut as part of the cost-cutting initiative. 881 of those were Las Vegas employees, mostly in management or mid-management positions. Jim Murren
Find next-level experience
One minute, you’re just trimming hedges and shooting the breeze with your neighbor. But then he brings up Vegas and you’re thinking about the incredible meals, world-class hotels, pools inside of pools and unparalleled entertainment. You’re thinking about iconic artist residencies like Aerosmith. Priorities take shape. Vegas first, lawn and everything else, second. Just like that, Vegas Changes Everything. (Visti Las Vegas/Youtube)
Vegas Changes Everything
A weekend getaway is nice for anyone, but a weekend getaway in Vegas ... that’s a next-level experience with shows, clubs, spas and more. With a chance to see iconic artist residencies like Gwen Stefani, you might just find yourself going from pushing your child on a swing, to pushing back a birthday party. See how Vegas Changes Everything. (Visit Las Vegas/YouTube)
THE LATEST