Eldorado Takes Over Caesars Entertainment

The drama about the gambling company Caesars Entertainment has come to an end. After the “play” has spanned numerous acts, an end can now be announced. Caesars Entertainment is to pass into the hands of the Eldorado Resorts for a total transaction sum of around 17 billion US dollars. For the buyer a doubly clever move: You become the largest gambling company in the USA, and at the same time you can take off directly on the Las Vegas market.

Over 17 billion US dollars costs

The US gambling industry is one mega deal richer. Already in the last months it had indicated itself that one is with Caesars Entertainment obviously interested in a sales. Already some time ago the Eldorado Resort had made an effort for the company, but at that time they were ice-coldly beaten down with their price expectations (a good 20 percent below market value). Obviously no word for eternity, because now can be announced around this Deal execution. As both sides officially announced this week, the Eldorado Resorts will take over their former competitor . The purchase price is to be approximately 8.6 billion US dollars, which will be transferred both in cash and in the form of shares. Experts however calculate that Eldorado together with the debts of Caesars will probably have to pay about 17 billion US dollars for the takeover.

Caesars has debts for quite a while already. Already 2008 two big investors decided for their exit and left a gaping gap from a financial point of view. This gap was so large that one of the most important subsidiaries had to be closed. Afterwards, things went a little healthier for the group again, but in the last eleven years the company has not really recovered from this situation. After all, the name Caesars Entertainment should obviously be retained. Both companies will therefore continue to appear under their previous names. In the future, the Eldorado Resorts will hold 51 percent of the company, Caesars still holds 49 percent.

New flagship on the US market

For the Eldorado Resorts, the takeover can certainly be described as a big coup despite the horrendous financial expenses. On the one hand one takes over the famous Caesars Palace and thus one of the figureheads of Las Vegas. Before however the company, which originates from Reno in Nevada, was not yet active in the city of the sin. In addition, there are other casinos in Caesars’ portfolio. In total, the Group operates a good 50 casinos in 13 US states and five countries. Eldorado Resorts becomes by the assumption and its own 26 Casinos thus with more than 70 Casinos the largest gambling enterprise of the USA. A development, which was quite indicated in the last years. In the 1970s the Eldorado Resorts developed. At that time, however, it was only a single casino, which was opened in the city of Reno. The company grew and grew and could secure itself also by clever Zukäufe in the last years an ever larger influence on the US-American gambling market. The majority of the company is still owned by the founding family Carano, but managing director Tom Reeg is also significantly involved in the success of the company. Before the deal, the value of the Eldorado Resorts was estimated at around four billion US dollars.

Wanted by billionaire Carl Icahn fulfilled

The takeover of the group is not only a pleasure for the Eldorado Resorts, but also for billionaire Carl Icahn. The latter had already begun some time ago to secure company shares in Caesars Entertainment. Gradually, Icahn expanded its shareholding until it was more than 30 percent. At the same time, three seats on the board were taken by the billionaire. From the very beginning, Icahn has pursued the goal of selling Caesar Entertainment, which has now been achieved once again. Accordingly, it is not surprising that the billionaire was extremely satisfied after the deal:

“It is rare to admire a merger where the synergies are so strong that one and one equals five. I am delighted with the success of our investments. While a few months ago I occupied an important position and criticised the Caesars Management Board, now I want to do something that I rarely do. Namely, to praise the Management Board for acting responsibly and decisively in negotiating and approving this transformation.”

The investors on the stock exchange seem to see things similar. Caesars Entertainment’s shares increased by a whopping 15 percent immediately after the agreement was announced. The Eldorado securities, which reduced by more than seven percent in the course of the deal, were much more difficult to buy. Curious: The Wynn Resorts, at least not actively involved, were able to report an increase of 0.7 percent as a competitor of the Eldorado Resorts. This competition in particular is likely to become really interesting in the coming months and years. After all the Eldorado Resorts are now a new, correctly large Big Player , which would like to prevail also in Las Vegas against competitors such as the Wynn Resorts, MGM or Las Vegas Sands. But with the new “firepower” this is apparently more imaginable than ever before.