One of the largest casino operators in the United States, Eldorado, has acquired Caesars Entertainment for $17.3 billion in cash and stocks.
Seldom there are economic opportunities such as the deal achieved by Eldorado and Caesars Entertainment. The two gaming giants have decided to put any differences behind and Eldorado will merge the activities in order to create an iGaming super giant with 60 properties in the United States and appetites to provide gamers with even more accomplishing options.
Eldorado took over Caesars for an amount of $17.3 billion. $7.2 billion will be paid in cash and the rest will be paid in Eldorado stock shares. While the announcement specified that the deal is a “merger”, Eldorado de facto acquired Caesars.
A smooth Transition
One would imagine that deals of such magnitude wouldn’t sit particularly well with either companies, but in the case of Caesars and Eldorado, it worked out just perfectly. The executives and operations seem to dovetail nicely between the two iGaming giants. What is known is that Caesars will continue to be the leading brand.
All properties will bear Caesars’ name as the boards have figured that it was the more popular brand. Meanwhile Eldorado will be the majority owners of the company, with 51% of the total stock in its favor. A new executive board will be created that will focus on the management of the new entity.
The company will be presided over by 11 executives, six coming from Eldorado itself and another five from Caesars. The board creation will take several months until a redundancy list is drafted and internal restructuring is carried out.
Think of the Synergies
The merger between the gaming operators is definitely a remarkable feat that has gone without any friction whatsoever. They key reason behind this is the fact that these companies have been open with one another from the start.
The reason why Eldorado and Caesars are pushing ahead with this move is because they have found a way to co-exist and derive synergies. The companies estimate that they may accumulate $500 million more per year thanks to the move, with additional financial windfall coming further down the road. Eldorado CEO Thomas Reeg had the following to say:
Eldorado’s combination with Caesars will create the largest owner and operator of U.S. gaming assets and is strategically, financially and operationally compelling opportunity that brings immediate and long-term value to stakeholders of both companies,
Together, we will have an extremely powerful suite of iconic gaming and entertainment brands, as well as valuable strategic alliances with industry leaders in sports betting and online gaming.
The recent business deal has been made possible thanks to Carl Icahn who had taken a 10% stake in Caesars as early as February, 2019. Mr. Icahn has been rather relentless since to make a sale that involves Caesars.
Facing a rather determined Mr. Icanhn, Caesars has decided to go ahead with the sale. Eldorado however hasn’t been just looking to acquire a company. Instead, the pair of companies sat down to discuss a business strategy that would allow them to work together and grow.
The businesses will own 60 properties together and be present in 16 states in the U.S. This is a significant market that would allow for rapid expansion across any segment that Caesars, as the entity will be referred collectively, sees fit.
Unanimous Approval and Thinking Big
With both companies happy to see expansion efforts rekindled, the companies are in a unique position to enter any new legal market in the United States. The U.S. has been going through a rapid expansion of its spots betting market.
Digital wagering is also gaining a lot of steam, which has given a lot of companies the courage to go ahead and try to push for mobile gaming which still remains a bit of a contentious issues from a legal standpoint.
More importantly, the Department of Justice Opinion that was targeting digital wagering has been defunded by Congress which is certainly going to prop up the efforts done by companies and lawmakers for legalizing sports betting in more states around the country.
Ultimately, Eldorado and Caesars have decided to push ahead with their deal at a time when the U.S. is riding the popularity of sports betting and business in casino properties is booming.