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Eldorado sells Montbleu in Lake Tahoe ahead of Caesars acquisition

Eldorado Resorts agreed to sell the 400-room Montbleu Resort in Lake Tahoe, Nevada, to Las Vegas-based Maverick Gaming — a sign that Eldorado’s acquisition of Caesars Entertainment Corp. could close as soon as next month.

On Eldorado’s last earnings call, management noted Lake Tahoe was the only region left that needed a sale agreement before the $17.3 billion merger with Caesars could close. The Montbleu deal was announced Tuesday morning and is expected to close in the second half of 2020.

“The agreement to divest Montbleu is consistent with our continued focus on the expected closing for the Caesars transaction in the first half of 2020,” Eldorado CEO Tom Reeg said Tuesday in a press release.

Costs were not disclosed, but Deutsche Bank analyst Carlo Santarelli said in a Tuesday note that the Montbleu generated less than $10 million of annual earnings before interest, taxes, depreciation, amortization and restructuring or rent costs — which means the sale was likely “immaterial from a financial perspective.”

Even so, Santarelli said the sale represents a meaningful milestone, since it’s likely the last hurdle before Eldorado gains approval from the Federal Trade Commission for the Caesars deal.

“We believe the FTC process will be finalized in the very near term, if it has not already concluded,” Santarelli said in the note. “(Eldorado) remains on track for a mid-April closing, with financing likely to come in the last week of March or first week of April.”

Jefferies gaming analyst David Katz also expects the transaction to close next month, despite public market volatility amid the coronavirus outbreak.

Katz said near-term concerns — such as event cancellations in Las Vegas and Eldorado’s ability to sell a Strip asset after the deal closes in the current economic climate — have weighed on Eldorado’s shares, but these short-term issues do “not erase the opportunity” of the merger.

Maverick has been growing rapidly since it was founded in 2017; it now owns four casinos in Northern Nevada, three casinos in Colorado and 19 card rooms in Washington.

It’s also set to acquire a property in Louisiana — in January, Eldorado agreed to sell the Eldorado Resort and Casino in Shreveport to Maverick for $230 million in cash.

Acquiring the Montbleu would increase the company’s position in Northern Nevada to five casinos, nearly 1,600 hotel rooms and more than 2,100 slot machines, according to a Tuesday press release from Maverick.

Majority owner Eric Persson said Maverick’s growth isn’t likely to stop there.

“We see great opportunity in Northern Nevada and the Reno Tahoe market, and are actively seeking more distribution there,” he said in the release.

The Montbleu transaction is subject to regulatory approvals and other customary closing conditions.

Eldorado shares rose 9.9 percent to close at $29.05 Tuesday.

Contact Bailey Schulz at bschulz@reviewjournal.com or 702-383-0233. Follow @bailey_schulz on Twitter.

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