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NGC signs off on Eldorado, Caesars merger

The Nevada Gaming Commission Wednesday signed off on the planned $17.3 billion merger between Eldorado Resorts and Caesars Entertainment that now awaits a similar approval this month in Indiana and New Jersey.

It has been more than a year since the deal was announced in June 2019 and Gary Carano, Eldorado’s executive chairman of the Board of Directors, told the Nevada Gaming Control Board they were ready to move forward.

Caesars operates 53 properties in 14 states, while Eldorado owns and operates 21 properties in 11 states.

Carano talked about how Eldorado approached the Caesars Entertainment board of directors about a potential acquisition and were rebuffed initially.

“We understand that there is only one Caesars Palace and one Caesars Entertainment,” Carano told the Gaming Control Board. “It’s a brand that is known worldwide. The Las Vegas properties have over the years been a little bit neglected but over the last couple of years with (Caesars CEO) Tony Rodio (who will stay on as a strategic advisor) and his team infusing money back into the properties. They’re great assets and we’re very excited about the opportunity to acquire these properties as well as across America that Caesars has built.”

Carano said they still view themselves as a small family-owned company, and that will be their “niche.” All casinos have hotel rooms, slot machines, table games and restaurants, but he said the team members make the difference.

“The culture we will bring to Caesars is we will empower the property managers to operate their properties,” Carano said. “Yes, we will have a corporate team to aid and direct. It has been well received.”

Carano said Caesars’ reputation for taking care of its players and guests is renowned and is glad to combine those two cultures.

Five Caesars board members will join six El Dorado board members as part of the merger, Carano said. Gary Selesner, regional president of Caesars Entertainment, will be president of the Las Vegas properties, Carano said.

Eldorado CEO Tom Reeg said the coronavirus took its toll as the companies furloughed about 95 percent of employees on both sides of the transaction with the closures starting in March before reopening. It caused them to relook at the deal.

“We started to look at whether this merger made sense to us, and you were asking us the same question as were other regulators in other jurisdictions,” Reeg said. “We had done a great deal of planning for integration by the time COVID hit. We had a great look into Caesars beyond what you do with your typical due diligence. We were even more excited about the opportunities we saw as we pulled together.

“As we looked at it, the choice as individual companies was whether we are better off solo or better off together. It was very clear quickly the answer was we should keep moving forward with the transaction. All of the opportunities that we saw when we cut the deal were still there. The benefits were probably moved back a quarter or two calendar wise as the world reopened.”

Reeg said financial results since the reopening “have exceeded our expectations. The reopening across the country and Nevada in particular have gone quite well. Demand has been there.”

Reeg said the capital raising done three weeks ago was successful and the company is positioned in case of another closure caused by COVID-19.

“We have built a great deal of liquidity, and we’re very excited about what we did with equity and debt because we know we can’t rely entirely on debt,” Reeg said. “That’s been a problem with Caesars in particular and the industry in the past. This is the biggest equity piece of any transaction in this sector.”

Reeg said they’re ready to execute a comprehensive integration plan.

“We will continue operations in Nevada as if Southern Nevada will not change much at all,” Reeg said. “We’re very impressed with Caesars’ team in Southern Nevada.”

Reeg said they know they have a responsibility as the largest domestic operator and among the largest employers in Nevada to be “a leader across the board” when it comes to corporate responsibility.

Reeg said Caesars has been through a fairly rocky path over the last decade since the (leveraged buyout in 2008) and strayed from its focus on the customer and empowering leadership at the local level.

“That’s what we do as a company,” he said. “We’re not big on building corporate infrastructure and making decisions from 2,000 miles away and impose them on the local leadership. We think that the operators at the local level are best positioned to make the decisions you need to make to serve your customers and employees.”

Reeg said with more than 50 properties across the U.S. with the merger, there’s not a place they miss. The new company won’t chase international opportunities like Caesars but focus on domestic gaming.

“We think what we’re good at is taking existing properties, optimizing their operations, building a responsible capital structure and driving value for all of our stakeholders,” Reeg said.

Caesars will add to its mix Denver, Columbus, Ohio, south Florida and Houston.

“That will be a big benefit for Southern Nevada as a key destination market within Caesars Rewards,” Reeg said. “We are excited about the new customers they will bring to the market through our properties that come into the system.”