Eldorado Resorts said Monday it has agreed to sell its Shreveport, Louisiana namesake casino for $230 million to Las Vegas-based Maverick Gaming to help clear a regulatory hurdle in its planned $17.3 billion merger with Caesars Entertainment.
The sale of Eldorado Shreveport was all about announced late last year by Eldorado CEO Tom Reeg, who said the company would need to sell a northern Louisiana property to avoid any federal antitrust issues. The merger with Caesars will give the company ownership of Horseshoe Bossier City.
“The agreement to divest the Eldorado Shreveport is consistent with our continued focus on reducing debt ahead of the expected closing for the Caesars transaction in the first half of 2020,” Reeg said in a statement.
In December, Eldorado sold three casinos – two in Missouri and one in West Virginia – to Century Casinos and real estate investment trust VICI Properties for $385 million. The company is in the process of selling a Missouri casino and Mississippi casino to Twin River Worldwide Holdings for $230 million.
Following the sale of Eldorado Shreveport and the completion of the Caesars merger, Eldorado will operate five casinos in Louisiana.
The investment community wasn’t surprised by the announcement and analysts expect other casino sales both before and after merger closes. The Eldorado-Caesars deal requires approvals by regulatory agencies in 18 states and a sign-off by the Federal Trade Commission.
“The continued evolution of the combined company should include further property sales in other markets, the largest of which should occur post-closing,” Jefferies Gaming analyst David Katz told investors. “Nonetheless, we believe there remains considerable value to be captured from the combined entity.”
Based on previous comments by Reeg, it’s expected one the three casinos owned by Eldorado and Caesars in Lake Tahoe, Nevada – most likely Montbleau – will be sold. Deutsche Bank gaming analyst Carlo Santarelli said the combined companies concentration in Atlantic City in uncertain.
“Given the competitive nature of the Atlantic City market and market concentrations relative to history, it is reasonable, at this time, to assume no sale is required.” Santarelli told investors in a research note. “If so, Tahoe remains the final FTC related hurdle, and we believe this process remains on track. We would expect this transaction to be very small from both a proceeds and multiple perspective.”
Privately held Maverick is acquiring the 400-room Eldorado Shreveport for cash and is subject to a working capital adjustment. The Las Vegas-based company recently closed its acquisition of three casinos in Colorado. Following an active 2019 for mergers, Maverick currently operates 26 properties in three states – four rural Nevada casinos, the three small Colorado casinos and 19 small cardroom casinos in Washington.
Maverick CEO Eric Persson said the transaction gives the company a presence in its fourth state and a market that attracts business from the Dallas-Fort Worth area and north Texas, a roughly three-hour commute.
“Maverick continues to bet on diversified economies as we expand our gaming portfolio,” Persson said in a separate statement. “The population in the Dallas market exceeds 7.5 million people, and Dallas encompasses the third-largest concentration of Fortune 500 companies in the United States.”
#exclusive – Eldorado to sell Louisiana casino to Maverick Gaming for $230 million. –@howardstutz, CDC Gaming Reports. https://t.co/XyMiSlYXry @ElDoradoResorts #CDCgaming
— CDC Gaming Reports (@CDCNewswire) January 13, 2020
Maverick said it is financing the deal with cash on hand and financing from HG Vora Capital Management and Angelo Gordon, two private investment firms.
“Maverick’s focus to date has been on the growing, vibrant and dynamic economies of Salt Lake City, Seattle, and Denver,” Persson said.
SunTrust Bank gaming analyst Barry Jonas said Maverick Gaming’s leadership – Persson, who is the former senior vice president of slots at Las Vegas Sands, and Justin Beltram, former Vice President of Slots at Bellagio and Marina Bay Sands – have been actively growing the company.
“We would not be surprised to see Maverick acquire additional properties as larger players look to divest smaller non-core properties and/or FTC mandated sales,” Jonas said.
The Eldorado Shreveport casino has 1,500 slot machines, 50 table games and six restaurants.
Shares of Eldorado closed at $59.34 on the Nasdaq Monday, up 89 cents or 1.52%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
