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Eldorado, Caesars merger gets final approval needed for deal to close

Updated July 17, 2020 - 4:12 pm

The New Jersey Casino Control Commission on Friday approved Eldorado Resorts Inc.’s $17.3 billion acquisition of Caesars Entertainment Corp., the last regulatory approval needed before the deal can close.

The deal will result in the formation of the largest gaming company in the United States.

The New Jersey commission’s approval, in a 2-0 vote, came after more than 11 hours of testimony and deliberations over three days.

“I found their testimony to be forthright in my view,” Commission Chairman James Plousis said in deliberations leading up to the vote. “The petitioners have been honest about the challenges that lie ahead. They have made commitments to restore the proud history of the properties they would acquire and they’ve acknowledged the importance of Atlantic City to their success.”

Commissioner Alisa Cooper said she was moved by Eldorado officials saying they believe in the Atlantic City market.

“Anyone on any company that believes in Atlantic City gets my attention,” she said. “It’s believing, it’s creating, it’s initiating, it’s developing, it’s putting everything together. I truly believe that Eldorado should be given the opportunity to be a part of the Atlantic City gaming industry. I look forward to their success.”

The deal was announced over a year ago in June, and required approval from shareholders, the Federal Trade Commission and regulatory bodies from the 16 states in which the merged company will operate, including Nevada, in order for the deal to close.

Company officials haven’t addressed the media about what happens next and when.

Two petitions rejected

During Thursday’s session, commissioners received a petition from Hard Rock Atlantic City and Ocean Casino Resort seeking to intervene with their own testimony on the deal. Late Thursday, commissioners rejected the petitions.

In Thursday’s testimony, commissioners questioned two economists about whether the deal would give the new company a competitive advantage because of the concentration of casinos in Atlantic City.

Eldorado already operated the Tropicana Atlantic City and, with the acquisition, would add Caesars Atlantic City and Harrah’s Resort at Atlantic City when the deal closes. Caesars already announced in April that it had planned to sell Bally’s Atlantic City to Twin Rivers Holdings LLC of Rhode Island for $25 million.

Among the 40 conditions New Jersey regulators are requiring of Eldorado are $400 million in investments over three years. It also will be required to put $125 million into a trust account if the Bally’s deal fails to close on time. The company must assure no property closures for five years after the deal closes.

What’s next?

The real work begins after the deal closes, said Las Vegas-based Brendan Bussmann.

“Shareholders need to get together one more time to ratify everything,” said Bussmann, director of government affairs for Global Market Advisors LLC.

“Now, you have to start merging these two organizations into one from a systems standpoint and from an operations standpoint. While it’s been a long journey to get to the point we’re at today, delayed because of COVID, things can move in a forward direction.”

Eldorado’s way of doing things will be different from Caesars. While Eldorado has emphasized to regulators across the country that they prefer to give their local managers authority to make decisions based on their own market, Caesars was more centralized with many big decisions emanating from Las Vegas.

Reno’s Carano family has enjoyed success and members of the family will continue to fill the major executive roles of the corporation.

The new company will be called Caesars Entertainment and the public company stock will be traded using the CZR ticker symbol on the Nasdaq exchange. The new Caesars also will keep many of the traditional Caesars brands and use them as needed across the country.

Eldorado also will take hold of the Caesars Rewards loyalty program and integrate existing Eldorado customers into it quickly.

Divesting properties

In regulatory meetings, Eldorado executives talked openly about divesting properties to comply with conditions imposed by various commissions and boards.

A new batch of divestitures was ordered in Indiana. The company also said it has the ability to sell other properties, especially if a sale would help raise cash to pay off debt, which doesn’t become a factor until 2024.

Speculation abounds as to whether a current Caesars asset in Las Vegas would go on the market and Eldorado officials aren’t saying whether a specific property would be sold.

In addition to Caesars Palace, Eldorado will own Harrah’s Las Vegas, The Linq Hotel, Flamingo, Cromwell, Bally’s, Paris-Las Vegas, Planet Hollywood and the off-Strip Rio. The company also has the brand-new Caesars Forum convention center that was on the verge of opening when the COVID-19 pandemic hit and the meetings and convention industry shut down. The High Roller observation wheel is also a part of the portfolio and three large retail centers — The Linq Promenade, the Miracle Mile Shops at Planet Hollywood and The Forum Shops at Caesars — are attached to company assets.

Caesars Palace also is home to The Colosseum, a 4,100-seat entertainment venue that has hosted concert residencies by Celine Dion, Elton John, Rod Stewart, Cher, Bette Midler, Shania Twain and Mariah Carey.

“If I had a dollar for every rumor I’ve heard on a property for sale, I could be really, really wealthy,” Bussmann said.

Bussmann said potential buyers are nearly as interesting as the speculation of which property Eldorado would part with.

Bussmann said not to count out tribal governments that may have generated the financial firepower to consider purchasing an asset.

The Seminole Tribe in Florida has had success with its Hard Rock properties — and the Hard Rock brand is going away as a resort in Las Vegas with the transformation of the existing hotel to Virgin Hotels Las Vegas. There’s still a Hard Rock presence on the Strip, one of the traditional Hard Rock Cafes tied to the Seminoles.

California tribal operations also could have the wherewithal to enter the market. Bussmann said the San Manuel Band of Mission Indians fits the profile. The tribe, with a casino in Highland, California, in San Bernardino County, has philanthropic ties to UNLV and also is a sponsor for the Vegas Golden Knights and the Las Vegas Raiders.

Eldorado shares were down $2.77, 6.8 percent, in trading more than twice the daily average volume on the Nasdaq market Friday. After hours, the issue perked up 25 cents, 0.7 percent, to end at $38.25 a share.

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

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