Understanding The Proposed Ownership Of A Consolidated Caesars



Combined value

The Caesars Entertainment (CZR) and Caesars Acquisition Company (CACQ) merger should create a company with a combined market capitalization of $3.2 billion, based on closing prices on December 19, 2014. The merged company will have a combined cash balance of $1.7 billion.

After taking into account the merger and the proposed restructuring of CZR’s operating unit Caesars Entertainment Operating Company (or CEOC), CZR as a whole is expected to produce positive free cash flow on a consolidated basis.

Proposed ownership

Each outstanding share of CACQ class A common stock will be exchanged for 0.664 share of CZR’s common stock, which could result in CZR’ stockholders owning ~62% of the combined company on a fully diluted basis and CACQ stockholders owning ~38%. No new debt will be issued in connection with the merger.

The merged company will continue to be controlled by affiliates of Apollo Global Management (APO) and TPG Capital. Based on each of the company’s records, ~90% of the stockholders of CZR also own shares of CACQ, and vice versa, which implies significant overlap in the stockholders of the two companies.

The merged company will conduct business as Caesars Entertainment and will continue to trade on the NASDAQ under the ticker CZR. CZR is a component of ETFs like VanEck Vectors Gaming (BJK). ETFs like BJK and Consumer Discretionary Select Sector SPDR Fund (XLY) invest heavily in leisure companies.

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