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New Jersey Gives the Eldorado-Caesars Billion Dollar Merger a Thumbs Up
By Jeff Osienya Jul 20, 2020 IndustryHomestretch for Eldorado buyout of Caesars after the gaming body in New Jersey approves the $17.3 billion deal.On Friday, the approval campaign for the Eldorado Caesars merger was officially concluded after the New Jersey Casino Control Commission gave its thumbs up in a unanimous 2-0 vote. The Garden State’s gaming board was the only remaining regulatory body that hadn’t given its approval yet after the FTC, Nevada, and Indiana recently okayed the merger-acquisition.
The approval from the Garden State’s gaming authority however wasn’t a walk in the park for Eldorado. It took over 11 hours of testimony and more than three days of deliberations from members of the state’s gaming body. Overall, it has taken over 1 year for the merger to receive the required approvals from shareholders, the FTC (Federal Trade Commission), and the gaming regulators of 16 different states in which the combined casino company will be operating.
A Surprise Concession for Atlantic City
As was the case with the FTC, Nevada, and Indiana, New Jersey regulators had to subject the Eldorado-Caesars merger to a bunch of text-book conditions before giving the buyout a go-ahead. These conditions are usually meant to guarantee that even with mergers, there isn’t going to be a monopoly for the new company in a specific market. Therefore, as part of the deal, regulators usually push the merging companies to divest some of its properties to third parties, among other conditions.
Caesars seemed to have foreseen this and thus, back in April, the company had let go of its Bally’s Atlantic City Property, selling it to Rhode Island-based Twin River Worldwide Holdings for $25 million, but this wasn’t enough for New Jersey’s gaming regulatory body. Given that the Garden State’s regulator had the last say for this billion-dollar merger, the ombudsman leveraged its position to throw in a surprise concession.
If you know your way around Sin City, have you ever wondered why the Claridge, Atlantic Club, and Showboat no longer have casinos? Well, a couple of years ago, Caesars Entertainment Corp sold these properties with a restriction on the title deeds. The said restriction refrained the new owners of the properties from operating these properties as casinos.
Before, securing approval from the regulators in the Garden State, Caesars was compelled to lift those restrictions to encourage a fairly competitive casino environment in Atlantic City. This was a welcome surprise for both the restricted property owners and the casino community in Atlantic City at large. The news was a breakthrough especially for Bart Blatstein, the current owner of Showboat as he had been trying to bring back gambling to the property for over a year, by connecting it to an adjacent property whose deed didn’t have any restrictions.
What Now?
Reno-based Eldorado Resorts Inc can now proceed with closing its $17.3 billion buyout of Caesars Entertainment Corp, to form the biggest casino brand by gaming assets in the 21st Century. Eldorado will purchase Caesars stock at an agreed $12.30 per share, and for buying each share, $8.70 will be paid in cash then the rest will be paid as Eldorado stock.
This deal is expected to be sealed in the coming days, to vault a new company will adopt the Caesars Entertainment name and will be traded publicly on the Nasdaq exchange under the CZR ticker symbol. After Nevada’s approval on Friday, Caesars Entertainment’s stock closed at $12.39 while Eldorado’s traded at $38.35 by close of the markets.
56% of the newly formed gaming conglomerate will be owned by Eldorado while American billionaire investor, Carl Icahn will stand as the largest single shareholder, owning over 10% of the merged company. Icahn had bought a massive chunk of Caesar’s shares in late 2017 to bail the company out from bankruptcy protection, and he was one of the principal supporters of Caesars’ sale since the plan was disclosed in the summer of 2019.
The company will own a total of 52 properties (down from 60 after divesting 8 of them) across 16 states in the USA. On top of that, this acquisition will also affect Caesars Inc-owned properties in Canada, Egypt, the United Kingdom, and a prestigious golf course in Macau, China’s gambling enclave. Who would have known that a single casino-hotel in Reno, Nevada, started by a family in 1973 could climb to the top spot in global gambling brands?
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