- Eldorado to buy Caesars for $8.5bn in cash and stock
- The company will also assume $8.8bn in debt from Caesars
- November 15 shareholder meeting to determine the successful outcome of the deal
Caesars and Eldorado’s shareholders will meet on November 15 and vote on whether to approve a proposed $8.5bn acquisition.
Eldorado and Caesars’ Shareholders Meet
On June 24, 2019, Caesars Entertainment Corporation and Eldorado Resorts announced that Eldorado would be buying up shares in Caesars and assume control over the company, creating a new global casino operator giant.
The companies explained that for the move to go through, they would need to hold shareholder meetings and discuss terms with all parties involved in their businesses that hold a stake. Eldorado offered to pay up to $8.5 billion in cash and stock as well as assume Caesars’ $8.8 billion debt.
As a result, Eldorado is hosting a meeting on Friday, November 15, in Eldorado Resort Casino in Reno. Each company will have a separate meeting to discuss the prospects of the potential merger/acquisition deal. Shareholders will need to vote and approve on the transfer of stock, effectively giving a greenlight to the deal. Eldorado’s management seems happy with the development.
Caesars has shown little signs of resistance either, with the company happy to have an out from its piling debt. According to analysts, the average price per share, factoring debt, would reach $13, which may be a little too much to pay for the company, some have said.
What Can Go Wrong?
Eldorado will definitely seek a quick development in the situation as the deal will have to be finalized by March 25, 2020. The company would need to pay additional $0.003333 for every day that the deal hasn’t been finalized after the deadline.
Securing a successful vote in November will be paramount, with the U.S. Securities and Exchange Commission (SEC) then being asked to approve the deal and allow the two casino operators to merge.
In June, billionaire Carl Icahn said that he gave his conditional support for the deal. The NY Post reported that there was internal strife in Caesars. At first, shareholders weren’t happy with the financial terms. Yet things, have turned out for the best as the company now seems to have given the go-ahead for the deal. Icahn was among the most important shareholders, as he holds 28.5% of the stake in Caesars.
Meanwhile, the boards of directors of both companies have recommended shareholders to give their approval, so that the deal may be complete within the specified deadline.
Dominating the US Market
Assuming everything goes well, the resulting company will have a strong presence in the United States, with 60 of some of the best casino resorts. The land-based operations will feature over 3,700 table games, plus another 71,000 slot machines, and present guest capacity would amount to over 50,000 guest rooms.
Elsewhere, debt and other financial challenges have left Caesars unwilling to invest more in a mulled $700-million South Korean project that is now less likely to happen.