Horseshoe Casino Baltimore's parent company acquired by Eldorado Resorts
By Regina Garcia Cano
Jun 24, 2019 | 6:50 PM
Caesars Entertainment, the parent company of Horseshoe Casino Baltimore, has agreed to be acquired by Eldorado Resorts in a cash-and-stock deal valued at $17.3 billion, the companies announced Monday.
The acquisition would create a casino juggernaut about 60 casino-resorts in 16 states under a single name, Caesars, creating the largest gambling operator in the United States. The deal — following pressure from activist investor Carl Icahn — is targeted to close in the first half of 2020 if approved by gambling regulators and shareholders.
“We are incredibly excited. This is an iconic brand,” Eldorado CEO Tom Reeg said referring to Caesars Entertainment during a conference call. “It’s really a level of property and brand that we have not had the great fortune to control and now we will.”
Eldorado will pay $8.40 per share in cash and 0.0899 shares of Eldorado stock for each Caesars share, or $12.75 per share. The transaction values Caesars at about $8.6 billion, and Eldorado will pick up about $8.8 billion of the casino’s debt.
Shareholders of Eldorado Resorts Inc. will hold about 51% of the company’s outstanding stock, with Caesars Entertainment shareholders holding the remaining and 49%.
The company will be led by Reeg, along with Eldorado Chairman Gary Carano. It will be headquartered in Reno, Nevada, where Eldorado is based, and have a significant corporate presence in Las Vegas, where Caesars is based.
The deal gives Eldorado its first access to the Las Vegas Strip market.
The deal was months in the making. Icahn revealed earlier this year that he had amassed an enormous stake in Caesars Entertainment and pushed for fundamental changes at the company, including board representation and a say in the replacement of the then-CEO. He argued that the company’s stock was undervalued and the best way to boost it would be to sell the company.
Caesars Entertainment Corp., which operates more than 30 casinos in the U.S., emerged from bankruptcy protection in late 2017, but it’s been struggling since.
Icahn in April appointed Caesars Entertainment’s current CEO, Tony Rodio, who had the same role at the billionaire’s Tropicana Entertainment, which was sold to Eldorado in 2018. He also got to pick board members.
“While I criticized the Caesars Board when I took a major position several months ago, I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction,” Icahn said in a prepared statement Monday. “As a combined company, Caesars and Eldorado will be America’s preeminent gaming company.”
The bankruptcy reorganization led to the creation of the real estate investment trust VICI Properties Inc. It owns the buildings and land of more than 20 casino-resorts, including Caesars Palace on the Las Vegas Strip, and leases the operations back to casino operators.
Eldorado said Monday that it also reached an agreement with VICI Properties Inc. in which VICI will acquire the real estate associated with Harrah’s Resort Atlantic City, Harrah’s Laughlin Hotel and Casino located about 100 miles south of Las Vegas, and Harrah’s New Orleans Hotel and Casino for approximately $1.8 billion.
Caesars operates three casinos in Atlantic City and Eldorado operates one.
The Baltimore casino opened in 2014. It is a partnership between Caesars and several local and national investors. The casino has been buying nearby properties in recent years.
Reeg told analysts and investors the company expects to sell some properties that may allow it to avoid federal anti-trust issues. It is also evaluating whether to sell properties on the Strip.
“As I sit here today, I tell you, I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” he said. “So, I would expect that we would be a seller of a Strip asset, but that decision has not been made.”
It is uncertain whether the new company will venture into Japan, where major casino operators have set their sights after the nation legalized casino gambling last year. Reeg said “no firm decisions” have been made on the international market, but the opportunity would have to be “stupendous for us to be running in that direction.”
Caesars’ stock jumped 16% Monday, while shares of Eldorado fell 10%.