CASINO

Are Caesars and Eldorado getting serious about casino marriage?

TAGs: Caesars Entertainment, Carl Icahn, Eldorado Resorts

The idea that Caesars might be seriously exploring the option of offering its hand in a marriage of casino operators continues to make headlines. Carl Icahn, a billionaire investor who seems to be purchasing a larger piece of the company on a weekly basis, fully supports a merger and there is now talk that the casino company could be negotiating a deal with Eldorado Resorts. If the two companies decide to partner up, it would result in the creation of a $9-billion gambling empire that could potentially rule the U.S. casino market.

Caesars, Eldorado getting serious about marriage?According to an exclusive report by Reuters, unnamed sources have indicated that the two companies are currently holding talks on a potential merger. Those sources state that Caesars has already turned over certain financial data to Eldorado in order to allow the latter to conduct due diligence ahead of any deal.

Eldorado hasn’t yet made a binding offer and there is no guarantee that it will. However, if Caesars has, in fact, presented information to the company, it is a strong indication that the gambling powerhouse is taking the idea of a merger more seriously than ever.

Eldorado owns and operates 26 properties in 12 states. It recently acquired Tropicana Entertainment in a deal worth $1.85 billion, expanding its portfolio into Indiana, Louisiana, Mississippi, Missouri, New Jersey and Nevada. Tropicana was previously owned by Icahn Enterprises, a company founded by Carl Icahn.

For its part, Caesars has over 50 properties in 14 states and five countries. It wrapped up a bankruptcy reorganization in 2017 after not finding a way to overcome $25 billion in debt and has yet to fully regain its former position. As of December 2018, it still carried long-term debt of around $9 billion.

Icahn now owns 20.88% of Caesars, making him the single largest shareholder of the company. He began purchasing a stake in February, initially acquiring about 10% of the available shares. That figure was increased to more than 14% shortly thereafter, then 19% before reaching its current level last week.

With his purchases, Icahn has been able to appoint three individuals to Caesars’ Board of Directors, giving him more pull in discussing a potential sale. The company’s current CEO, Mark Frissora, is stepping down in April and Icahn is going to have considerable power to appoint a successor. That could only further fuel the possibility of a merger between Caesars and another casino operator.

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