Could The Merger Between Eldorado And Caesars Be Put To A Halt?
Now that both sides have agreed to proceed with a merger, there might be some obstacles along the way for Eldorado Resorts and Caesars Entertainment Corporation. Both are huge companies, and if the two combine, they would make a gambling empire so big that no other competitor would be able to match. Therefore, regulators could be the ones to actually oppose the merger and put a stop to it before it is created.
One of the things that we are yet to witness is the amount of money that the deal is going to be worth to shareholders, which will be decided in approximately one month. The acquisition stake is $17.3 billion, and it has the potential to reshape the US casino industry as we know it.
Shareholders from both sides should meet on Nov. 15, when they plan to talk about the merger and the amounts of money they need to receive from the deal. At this moment, Eldorado is willing to pay the maximum amount of $8.5 billion both in stock and cash in order to acquire Caesars. Moreover, they also need to take care of the $8.8 billion of Caesars’ debt.
Both companies’ officials held in-house meetings to discuss all the possibilities and create an agenda for the upcoming shareholders’ talks. The investors from Eldorado will have to cover one part of the transaction by approving the stock issuance, which is valued at about $13 a share, and this is something that many people who invested in the company don’t really agree on. In fact, many analysts from Wall Street feel like the price is too high for what Eldorado should get in return.
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On the other hand, the officials of Caesars don’t share their opinion. Carl Icahn, who bought a huge share of Caesars and is pushing for a merger, stated that the merger was the “quintessential example” of how the collaboration between the Board and the activist shareholder could impact the value and enhance it for every single shareholder.
According to Icahn, once the merger takes place, Caesars and Eldorado would form the best gaming company in the US. He is so sure about the possible merger that he even stated that the two companies have “great synergies.”
At the moment, Icahn owns 28.5 percent in shares of Caesars, meaning that he has a big say in how the company should work and what steps ought to be taken in the future. Now Icahn is one of the most powerful investors in the world, and he has managed to buy some very big companies during his career.
His way of doing business is pretty much known to everyone at this point — he buys, and then he merges in order to make a profit. That’s exactly what he has had in store for Caesars ever since he bought his way into the company.
If the two companies combine successfully, they will create a gambling empire that has never before been seen in the US (or in the world). The merged company will own a total of 60 venues, which will have a total of 71,000 slot machines, as well as approximately 3,700 table games.
Since most of the venues also have hotels, it means that the company will have about 51,000 hotel rooms altogether. However, Caesars, being in debt, has already started to unload several properties, meaning that the merged empire will be a bit smaller than presented in this article.
Nevertheless, it will have the potential to grow even more if all goes well. All of that will happen if the regulators give the green light for the merger to happen.