Eldorado Resorts, Inc. (NASDAQ:ERI) and Caesars Entertainment Corp. (NASDAQ:CZR) investors today overwhelmingly voted in favor of the regional gaming company’s $17.3 billion takeover of the Caesars Palace operator.
Each company held special shareholder meetings on Friday in Nevada – Eldorado in its home city of Reno, and Caesars at the Tuscana Chapel inside Caesars Palace on the Las Vegas Strip. Eldorado investors voted in favor of the issuance of $8.5 billion in new common stock to fund the equity portion of the acquisition. The company is also taking on $8.8 billion in Caesars debt.
Holders of over 99% of the Eldorado shares that voted on the issuance of shares of Eldorado common stock in connection with transactions contemplated by the merger agreement with Caesars cast their votes in favor, representing approximately 87% of Eldorado’s outstanding common stock as of the record date for the Eldorado stockholder meeting,” said the regional gaming company.
The takeover values Caesars at about $13 a share, well above the $10.50 to $11 per share analysts expected a buyer would pay for the Harrah’s operator prior to news of the proposal becoming official. Eldorado formally announced its offer for Caesars on June 24, ending months of speculation about the fate of one of the largest Strip operators.
“Holders of over 99% of the Caesars shares that voted on the merger cast their votes in favor, representing approximately 76% of Caesars’ common stock outstanding and entitled to vote as of the record date for the Caesars stockholder meeting,” said Eldorado.
Billionaire financier Carl Icahn, who attained a board seat, installed Tony Rodio as chief executive officer, and then pushed Caesars to find a suitor, signed off on the deal several months ago.
On Course For First-Half Closing
Eldorado confirmed today that its purchase of Caesars is on pace to close in the first half of next year, though some analysts believe it’s possible that the companies officially combine in the first quarter.
The new company will retain the Caesars name, but will be majority owned by Eldorado shareholders, with that firm’s management team, led by CEO Tom Reeg, running the day-to-day operations.
Eldorado owns and operates 26 gaming properties in 12 states. But the Caesars transaction brings the regional firm its first entry onto the Strip. Even with several recently announced asset sales, the new Caesars will operate approximately 60 gaming venues across the US.
Analysts widely expect that Reeg and his team are set to divest several more properties in the coming months, including one or two in Las Vegas, with one analyst recently saying the company has already identified the properties it’s willing to part with.
Definitely A Big Deal
In valuing Caesars at $17.3 billion, Eldorado is paying more than quadruple its current market capitalization of $4.01 billion to acquire that company, and is engaging in one of the largest takeovers in gaming industry history.
Through the first half of 2019, the takeover was one of the ten-largest mergers and acquisitions announced in the US year-to-date. But it’s dwarfed in size by this year’s biggest: Bristol-Myers Squibb’s $89.5 billion combination with biotech firm Celgene.
Shares of both Caesars and Eldorado were higher in late trading on news that investors approved the marriage.