You might have several questions about Eldorado Resorts’ $17.3 billion acquisition of larger Caesars Entertainment Corp. Here are some answers.
What is the deal worth?
Eldorado will acquire all of the outstanding shares of Caesars for a total value of $12.75 per share, consisting of $8.40 per share in cash consideration and 0.0899 shares of Eldorado common stock for each Caesars share of common stock based on Eldorado’s 30-calendar day volume weighted average price per share as of May 23.
Based on that formula, the deal is worth approximately $17.3 billion, comprised of $7.2 billion in cash, approximately 77 million Eldorado common shares and the assumption of Caesars outstanding net debt.
Caesars shareholders will be offered a consideration election mechanism that is subject to proration pursuant to the definitive merger agreement. Giving effect to the transaction, Eldorado and Caesars shareholders will hold approximately 51 percent and 49 percent of the combined company’s outstanding shares, respectively.
What does the deal mean?
The deal would create the largest casino company in the world by gaming assets.
When does the deal close?
The deal will close sometime next year.
What does this mean for Caesars CEO Tony Rodio?
It’s unclear what Rodio will do once the deal closes.
“There has been no announcement about that,” a Caesars spokesman said after an emailed inquiry. “Tony will run the company (Caesars) through closing.”
Rodio was a key figure in Eldorado’s last major purchase, the $1.85 billion acquisition of Tropicana Entertainment Inc. Rodio, then CEO of Tropicana and a member of its board of directors, maneuvered the merger with Reeg and its controlling owners, members of the Carano family of Northern Nevada.
“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,” Rodio said in a statement.
What’s next for Caesars’ Las Vegas properties?
Eldorado CEO Thomas Reeg said in a conference call Monday that there could be reduction of the company’s Las Vegas assets.
Caesars operates Caesars Palace, Harrah’s Las Vegas, Flamingo, Bally’s, The Linq Hotel, The Cromwell, Paris Las Vegas, Planet Hollywood and Rio.
“I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” Reeg said on the call. “So I would expect that we would be a seller of a Strip asset, but that decision has not been made.”
Reeg did not name any specific property that could go up for sale, but analyst Chris Grove, managing director of California-based Eilers & Krejcik Gaming, said he believed Caesars and the Linq would not be sold.
What about expansion globally?
Reeg suggested the merger could spell the end of Caesars’ bid to enter the Japan market.
“The opportunity internationally is going to have to be, frankly, stupendous for us to be running in that direction. But no firm decisions have been made at this point,” he said.
Shareholders of the two companies need to approve the transaction, as do various regulatory bodies across the nation, including the Nevada Gaming Commission. The state Gaming Control Board, which will review the deal, has no timetable yet when the transaction would be placed on its calendar.