In the USA, the merger of Eldorado Resorts and Caesars Entertainment is becoming more and more concrete. The authorities have now given their approval. Specifically, the competent authority is the Nevada Gaming Control Board, the gaming regulator of the US state of Nevada. The latter announced last week that, from their point of view, there would be no objections to the merger of Eldorado and Caesars Entertainment. Nothing stands in the way of the roughly 17.3 billion US dollar deal.
In the USA, a mega-merger is once again emerging on the gaming market. It has been known for some time that the Eldorado Resorts are interested in taking over Caesars Entertainment. The plans going here have become more and more concrete in the last few months and are picking up speed again these days. This is because of the approval of the Nevada Gaming Control Board. This is the responsible gaming authority in Nevada. The deal could not have been carried out without their consent.
It has been known for some time that Eldorado would cost around 17.3 billion US dollars to take over Caesars. But after the takeover, one could call itself the largest gambling company in the United States. Under the name “Caesars Entertainment Inc.” gambling offerings are then to be operated at 60 locations in 16 US states. Eldorad would own eight properties on the Strip in Las Vegas alone: Caesars Palace, Linq Resort, Planet Hollywood, Haarahs Las Vegas, Ballys Las Vegas, Cromwell, Paris Las Vegas and Flamingo Las Vegas.
The fact that the gaming authority in Nevada sees no problems with the takeover is another step on the way to the merger. The Federal Trade Commission gave its approval at the end of June. Only the confirmations from the states of New Jersey and Indiana are still outstanding. If the green light is given, Eldorado Resorts may acquire Caesars shares at a price of US $ 12.75 per share. The new company with the name Caesars is then to be traded on the NASDAQ.
If the takeover is successful, the group should be able to save around 500 million euros annually. The aim is to optimize the overall economic performance of the locations throughout the USA. Tom Reeg, who is currently CEO at Eldorado, is primarily responsible for this. Reeg will also take over management of the combined company in the future.
Reeg announced that they wanted to optimize processes, build a responsible capital structure and thus increase the value for all shareholders. However, according to the CEO, this will not work without layoffs. Around 1,000 employees will therefore lose their jobs. In addition to the merger, the reason for this is also the corona crisis, through which Eldorado accumulated gigantic schools of around three billion US dollars in March.
The currently tense financial situation at the Eldorado Resorts is likely to worsen in the coming months. The merger alone will tear a big hole in the coffers, and the total debt after completion will be around 20 billion US dollars. The interest and installments for this must therefore be repaid, as well as the costs from a lease contract related to the merger. Here Eldorado has to put a total of around twelve billion US dollars on the table. In order to at least limit the burdens, both companies apparently want to sell casinos in Indiana. In addition, a resort on the Strip in Las Vegas is to be sold. Part of the debt will be covered in this way, but Eldorado is dependent on a quick recovery of the industry in the coming period.
Whether this will really happen can at least be doubted in the near future. The casinos have now reopened in Las Vegas, but the corona pandemic is still raging in the USA. No country is more affected by the virus than the United States. It will probably take several months, if not years, for the gaming industry to return to normal.