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Eldorado Resorts Snaps Up Caesars In $8.6B Deal To Create Largest Casino Operator

Eldorado Resorts has inked a deal to buy the larger Caesars Entertainment Corp. for nearly $8.6B in cash and stock. The combined entity, which will retain the Caesars name, will own or operate 60 casinos in 16 states, more than any other U.S. gaming company.

Caesars Palace, Las Vegas

The combination will add Caesars' portfolio, which has a heavy concentration in Las Vegas, with that of Eldorado, whose 26 properties are largely in the South and Midwest, though Caesars has properties in those regions, as well as internationally.

The new entity will serve customers in almost every major U.S. gaming market, Eldorado CEO Tom Reeg said in a statement.

At the same time, Eldorado is selling the real estate associated with three Harrah’s casinos to Vici for $1.8B, and modifying existing lease agreements with Caesars, bringing the transaction to about $3.2B in cash. Eldorado will use the proceeds from Vici Properties, a REIT specializing in gaming facilities and hotels, to fund its acquisition of Caesars.

The properties bought by Vici are Harrah's Resort Atlantic City, Harrah's Laughlin Hotel & Casino and Harrah's New Orleans Hotel & Casino. They will be added to an existing master lease and will have an initial annual rent of about $154M. 

Besides its namesake Caesars Palace property on the Las Vegas Strip, Vegas-based Caesars owns or operates Bally's Las Vegas, Flamingo Las Vegas, Paris Las Vegas and Harrah's Las Vegas, among others. Caesars Palace is owned by Vici (a spinoff of Caesars) and operated by Caesars.

Though smaller than Caesars in its number of properties, Eldorado has been busy in recent years buying properties, such as Grand Victoria Casino’s Elgin Riverboat Resort, Isle of Capri Casinos, Silver Legacy Resort Casino and Circus Circus Casinos. Eldorado management will lead the combined company and keep the company’s headquarters in Reno. 

The sale represents a price of $12.75/share for Caesars, a 29% premium over its closing price Friday and roughly double its price at the beginning of 2019. Activist investor Carl Icahn, who has owned as much as 18% of Caesars, has been pushing for a sale, the Wall Street Journal reports.