Eldorado, Caesars await merger approval

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While the coronavirus is keeping the doors to casinos across the country closed, it’s not stopping gaming companies from doing business.

Eldorado Resorts and Caesars Entertainment have sold three casinos at a discounted rate as the two companies seek approval from state and federal regulators for their $17.3 billion merger.

The deals with Twin River Worldwide Holdings Inc. were announced separately by the two gaming companies.

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Eldorado announced it would sell Eldorado Shreveport Resort and Casino in Shreveport, Louisiana, and the MontBleu in Lake Tahoe, Nevada. The Reno-based company had previously agreed to sell both properties to Maverick Gaming but pulled out of the deal.

Maverick Gaming had offered $230 million for the Shreveport casino and an undisclosed amount for the MontBleu. Twin River will spend $155 million to acquire both properties.

“At this time, it is more important for Maverick to nurture and protect their existing assets than it is to expand our asset base,” Eric Persson, owner of Maverick Gaming, said in a statement announcing their decision to back out of the deal to acquire both resorts. “We have worked closely with our lenders and our existing cash position gives us adequate liquidity through the first quarter of 2021 without addition action.”

Based in Las Vegas, Maverick owns five casinos in Nevada and Colorado, along with 19 card rooms in Washington state. Twin River, located in Lincoln, Rhode Island, owns and operates seven casinos in Rhode Island, Mississippi. Delaware and Colorado, along with a racetrack and 13 Off-Track Betting licenses.

“The agreement to divest Shreveport and MontBleu to Twin River Worldwide Holdings is consistent with our continued focus on closing the Caesars transaction in the first half of 2020,” Eldorado CEO Tom Reeg said in a statement.

In a separate transaction, Caesars agreed to sell its Bally’s Atlantic City casinos to Twin River and VICI Properties for $25 million in cash.

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According to the terms of the deal, Caesars will receive $6 million and VICI, Caesars’ real estate investment trust, will receive $19 million.

Once the deal closes, Caesars will continue to operate Caesars Atlantic City and Harrah’s Resort Atlantic City, while VICI will continue to own the land associated with Caesars Atlantic City.

Both deals were expected to ease antitrust concerns that could have been an issue with the Federal Trade Commission (FTC), which still needs to approve the Caesars, Eldorado merger. Gaming regulators in Nevada, New Jersey and Indiana are still investigating the merger.

Barry Jonas, a gaming analyst with SunTrust Robinson Humphrey, said the acquisition highlights opportunities for Twin River to grow via merger and acquisitions at potential fire-sale prices.’

For Eldorado and Caesars, Jonas said the deal removes a key overhang given prior concerns on Maverick’s ability to close in this environment.

“We think Eldorado and Caesars had already cleared antitrust concerns in New Jersey, with the Bally divestiture more an opportunity to reduce exposure to a saturated market while the (casino) likely benefits from more attention and potential capex investment under Twin River ownership,” he said.

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