Shareholders from Eldorado Resorts and Caesars Entertainment on Friday overwhelmingly voted in favor of the gaming companies’ $17.3 billion merger, setting the stage for the approval process from roughly 18 state regulatory agencies and the Federal Trade Commission.
The okay from the stockholders was the initial step to finalize the transaction, which was first announced in June. The merger will create a regional gaming giant which currently controls 60 gaming properties in 18 states, including nine in Las Vegas and four of the nine resorts in Atlantic City.
Eldorado’s stockholders, voting at the Eldorado Resort in Reno, cast their ballots 99% in favor of the merger. The votes represented 87% of the total stockholders. Likewise, Caesars shareholders, voting at Caesars Palace in Las Vegas, cast ballots 99% in favor of the deal. The votes represented 76% of the company’s stock.
Neither company commented on the vote.
Under terms of the agreement, 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 combined business will be called Caesars and its shares will be traded on the Nasdaq.
Stockholders also approved the new 11-person board of directors for the merged company.
Eldorado is providing six of its current board members to the combined company: Chairman Gary Carano, CEO Thomas Reeg – who will be CEO of the combined company – David Tomick, Frank Fahrenkopf Jr., Michael Pegram and Bonnie Biumi.
Current Caesars directors Keith Cozza, Jan Jones Blackhurst, Don Kornstein, Courtney Mather and James Nelson will be part of the new board. Cozza, Mather and Nelson were appointed to the Caesars board earlier this year by corporate raider Carl Icahn, who controls more than 28 percent of the company.
Both companies, during their recent third quarter earnings commentary, committed to reducing the number of casinos operated in markets where federal anti-trust issues could exist, and reducing overall corporate costs by $500 million. Current Caesars CEO Tony Rodio said last week the company expects to reduce costs by $75 million to $100 million by the time the merger closes.
As part of the merger, three Caesars properties under the Harrah’s brand in Atlantic City, Laughlin, Nevada and New Orleans were sold to real estate investment trust VICI Properties for a combined $1.8 billion. VICI will lease the operations back to Eldorado for total annual rent of $154 million.
Reeg this week said the company would sell one of the nine casinos in Las Vegas that its acquiring from Caesars, but not the off-Strip Rio resort. Caesars agreed in September to sell the property in a $516.3 million sale-and-leaseback to a company controlled by a principal of Imperial Companies, a New York-based real estate group. Caesars will continue to operate the Rio for a minimum of two years under the lease agreement, and the property will remain part of the Caesars Rewards network.
Separately, Eldorado announced casino sales in June and July that would seemingly help alleviate any federal anti-trust issues in certain markets. Combined, the companies currently operate 60 properties in 18 states.
In June, Eldorado sold three properties – two in Missouri and one in Mississippi – to VICI Properties and Century Casinos for $385 million. A month later, the company sold the Isle of Capri Casino Kansas City in Kansas City, Missouri and the Lady Luck Casino Vicksburg in Vicksburg, Mississippi for $230 million to Twin River Worldwide Holdings.
Both deals are still pending regulatory approvals.
Reeg said additional locations for potential casino sales were Louisiana, where Eldorado owns Eldorado Shreveport and Caesars operates Horseshoe Bossier City; and Lake Tahoe, Nevada, where Eldorado has Mount Bleu and Caesars operates Harrah’s Lake Tahoe and Harvey’s.
“We’re working through the process,” Reeg said this week on a conference call with analysts. “We’ve talked to you about markets where you should expect us to be active, in Northwest Louisiana and in the Tahoe area. Beyond that, we’re not expecting any divestitures preclosing that are related to closing the transaction.”
Reeg said the potential sale of any Atlantic City properties, where the combined company will operate four of the market’s nine casinos, was still under consideration.
#exclusive – Eldorado, Caesars shareholders approve $17.3B merger; states and FTC sign-offs next up. –@howardstutz, CDC Gaming Reports. https://t.co/xKoiYvygUi @ElDoradoResorts @CaesarsEnt #CDCgaming
— CDC Gaming Reports (@CDCNewswire) November 15, 2019
Caesars and Eldorado are both still operating as independent companies. Caesars has reduced the number of leased slot machines, eliminated contracts for outside contractors and professional services, ended the bidding process for a gaming license in Japan, and reduced jobs at the corporate level.
The 83-year-old Icahn acquired his ownership in Caesars through a series of stock sales and swaps that started at the end of last year. The activist investor had been pushing for a merger or sale of the casino company.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
