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Caesars and Eldorado to Merge: Icahn Gets His Way Again


Jun. 24 2019, Updated 7:35 a.m. ET

Caesars Entertainment

Reportedly, Eldorado Resorts (ERI) has agreed to merge with Caesars Entertainment (CZR). Eldorado will pay $13 per share for Caesars Entertainment, a 30% premium over the current market price. According to Bloomberg, citing people familiar with the deal, Eldorado would pay $8.7 billion in a mix of stocks and cash to clinch the deal. After accounting for debt, the deal values Caesars Entertainment at almost $18 billion. According to Bloomberg, “The combined entity will be split almost equally between shareholders of both companies.”

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Cost synergies

Eldorado has a market capitalization of $4 billion. It had a net debt of $3.8 billion as of March 31, 2019. Eldorado has gained 41% this year, while Caesars Entertainment has seen an upwards price action of 47% so far. The deal is expected to create cost synergies. According to Financial Times, Telsey Advisory Group analyst Brian McGill said acquiring Caesars Entertainment would be “a positive catalyst for [Eldorado] but only at the right price.” Meanwhile, once the deal is completed, Eldorado might look at selling some of Caesars Entertainment’s assets, as the combined entity would assume a significant debt load.

Carl Icahn

To be sure, there have been rumors about the deal for quite some time now. Icahn Associates, led by Carl Icahn, is Caesars Entertainment’s biggest shareholder. Carl Icahn has nominees on Caesars Entertainment’s board and has been pushing for a sale. In April, Icahn’s close ally Tony Rodio was appointed Caesar Entertainment’s CEO.

In the past also, Carl Icahn has instituted key changes at the companies where he buys a stake. Icahn pressurized Apple for buybacks and dividends. In 2015, Icahn took a stake in Freeport-McMoRan. Icahn got his nominees on Freeport’s board, after which the company sold off its energy assets as well as some copper assets to repay its huge debt pile.


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