• by Thom Forbes  @tforbes, June 25, 2019

If you put your money on Caesar Entertainment, as billionaire investor Carl Icahn did, you may have won big yesterday. Eldorado Resorts is putting down$17.3 billion in cash and stock to acquire the larger casino operator. The combination will form the largest gambling operation in the U.S., with about 60 owned, operated and managed casino–resorts across 16 states when the deal closes in the first half of 2020.

But first, it must be approved by the shareholders of both entities, as well as by gaming and trade regulators.

“The combined company will retain the Caesars name, boosting Eldorado’s recognition, Eldorado chief executive Tom Reeg said. The deal also gives Eldorado access to Caesars’ member-rewards program, which it expects will help boost future sales,” Kimberly Chin writes  for the Wall Street Journal.

“Eldorado’s management will lead the combined company, and will keep the company’s main operations in Reno. The combined company’s board will have 11 members, six of whom will join from Eldorado and five of whom will come from Caesars,” Chin adds.

“We are incredibly excited. This is an iconic brand,” Eldorado’s Reed said on a conference call with analysts. “It’s really a level of property and brand that we have not had the great fortune to control and now we will,” the AP’s Regina Garcia Cano writes.

“The merger comes after ‘a lengthy courtship and months of speculation’ about the merger, reports industry news site casino.org,” writes  Bill Chappell for National Public Radio. “For Caesars stockholders, Reno, Nev.-based Eldorado is pricing their shares at $12.75 each. On Friday, the stock had closed at just under $10. Of that amount, Eldorado will pay $8.40 per share in cash; the rest of the payment will be in the form of stock in Eldorado.”

“Icahn, Caesars’ top shareholder, had been pushing for a sale of the company and helped install industry veteran Tony Rodio as its CEO in April. The situation happens to bear close resemblance to another deal Eldorado did last year, when it acquired Tropicana Entertainment from Icahn Enterprises LP, the billionaire’s holding company, for $1.85 billion. Rodio was CEO of Tropicana, too,” reports  Bloomberg’s Tara Lachapelle for TheWashington Post.

“In M&A, much like in blackjack, players have to be wary of a stiff hand -- bid too high and it could be a bust. That’s especially true when the dealer is Carl Icahn,” Lachapelle writes, noting Eldorado’s stock dove more than 8% yesterday on the news.

“Reeg said Monday he expects the companies will sell a few of the nine Las Vegas Strip casinos involved in the merger. Also, casinos in some of the 16 states where the combined company will operate will also be on the move to avoid federal anti-trust issues,” Howard Stutz writes for CDC Gaming Reports.

“Reno-based Eldorado -- which has Nevada resorts in Reno, Lake Tahoe and Laughlin -- has long wanted to own a casino on the Las Vegas Strip. Reeg is just not sure if the company needs nine Strip properties, which include Caesars Palace, Bally’s Las Vegas, Paris Las Vegas, Harrah’s Las Vegas, Linq Hotel and Linq Promenade, Flamingo, Planet Hollywood, Cromwell, and the off-Strip Rio,” Stutz adds.

“We know there are assets we intended to prune,” Reeg told analysts on the 75-minute conference call.

Some additional wheeling and dealing with “an experiential real-estate investment trust,” VICI Properties, preceded  and evidently enabled the Eldorado/Caesars announcement.

“Eldorado has also reached an agreement with VICI Properties Inc. in which VICI will acquire the real estate associated with Harrah’s Resort Atlantic City, Harrah’s Laughlin [Nev.] Hotel and Casino … and Harrah’s New Orleans Hotel and Casino for approximately $1.8 billion,” the AP’s Cano reports. “Other terms of the deal include VICI being given right of first refusals for whole asset sale or sale-leaseback transactions on two Las Vegas Strip properties and the Horseshoe Casino Baltimore.”

That “complicated” agreement, engineered by Vici resident and COO John Payne, apparently was instrumental in resurrecting the Eldorado/Caesars deal, which was “falling apart,” Josh Kosman writes for the New York Post. The added cash gave Eldorado’s Reeg the confidence to raise his bid on Caesars, a source tells Kosman.

That could be key. As the Gambling Machines website preaches: “A positive attitude in gambling is a winning attitude.”