Eldorado Buys Caesars and Creates a Monster Casino Company
When the Eldorado Hotel / Casino in Reno opened its doors in 1973 with just a dozen gaming tables, no one would have imagined that from such humble beginnings, it would have eventually developed into the largest gambling operator in the entire United States.
But in point of fact, it has done just that.
In a deal that is sending shockwaves throughout the gaming community, Eldorado Resorts has executed a purchase of Caesars, in a transaction that adds a total of 60 different casino/resorts, spread out over sixteen states. The value of the deal is $17.3 billion, which is inclusive of $8.8 billion of debt.
Why Does Eldorado Buy Caesars To Create a Monster Casino Company?
Eldorado shareholders will have a 51% stake in the newly-merged company, with Caesars Entertainment shareholders owning the rest.
The company will bear Caesars’ name, and why not? Part of the value lies in the well-established Caesars brand, with the flagship Caesars Palace resort on the Las Vegas strip.
There was pressure for a deal, to be sure. Carl Icahn, the legendary activist investor, had put together a large chunk of Caesars stock and was campaigning for changes at the company, with both its board and CEO. He was able to install Tony Rodio as the Chief Executive Officer of Caesars, but still believed that the stock was greatly undervalued. The solution in terms of exploiting the value, in his estimation, was to sell.
Tom Reeg, who had been CEO at Eldorado, will take on the same role with the merged company, which will now have 81 properties and 81,000 employees.
The Carl Icahn Involvment
Interestingly enough, at this time last year, Eldorado had inquired about the same purchase a year ago, but was turned down. The Icahn involvement changed the atmosphere considerably. He’d had some history with Eldorado having sold Tropicana Entertainment to them last year.
Not everybody is overjoyed. There are anticipated cuts in costs – up to $500 million worth in the first year, according to an Eldorado announcement – and the Culinary Workers Union, which constitutes about 30% of the employees at the newly-merged company’s resorts, believes that their people will be on the short end of all of that. It is yet to be determined whether there will be considerable losses of jobs or cuts in wages and benefits.
The company is expected to sell at least one property of theirs along the Las Vegas Strip; they just don’t know at this time which one(s) it will be. Simply put, they don’t need as many assets on the Strip as they have.
When it comes down to it, Eldorado is a family business. And what a family the Caranos are – the patriarch, Don, opened the initial Eldorado Hotel some 46 years ago in Reno. Now his son Gary is the chairman of the board, and grandson Anthony (Gary’s son) is president and chief operating officer.
Gary’s brother Glenn has served as general manager of Eldorado; prior to that he had served on the Nevada State Athletic Commission and played quarterback for the Dallas Cowboys. Another famous member of the clan is Gina Carano, a former world women’s champion in mixed martial arts.
