Eldorado and Caesars deal one step closer
Eldorado Resorts and Caesars Entertainment are a step closer to becoming the single largest casino operator in the United States after meetings held in Nevada this week.
Calvin Ayre reports the potential merger between the two companies has been awaiting approval in Nevada, New Jersey and Indiana – the last three states on the list – and received the thumbs up from regulators in Nevada this week.
In an announcement made by Eldorado yesterday, it confirmed that both the Nevada Gaming Control Board and the Nevada Gaming Commission had said yes to the merger, a decision that didn’t come as a surprise to anyone.
It was previously forecast that there would be no more hurdles after the Federal Trade Commission gave its approval last month, and the three remaining states to sign off on the deal weer thought to have been waiting for that decision before moving forward.
New Jersey is expected to give its position on the merger when regulators meet on July 15.
As was the case with Nevada, no major obstacles are expected in the Garden State.
Indiana, however, might cause an issue, as some regulators there have already put up a little resistance.
They have asserted that there is a lack of horseracing experience, even though Eldorado is behind tracks in Pennsylvania and West Virginia.
Caesars and Eldorado deal misses June target
The coronavirus pandemic and its impacts on the travel, gaming and hospitality industries has delayed the $17.3 billion merger of casino operators Caesars Entertainment and Eldorado Resorts and it is was due to close in June.
A source with firsthand knowledge of the matter told CNBC that the deal is definitely moving forward, despite reports from recent weeks that the unfolding coronavirus crisis could derail the merger, according to Casino News Daily reports in April.
The transaction needs approval from gaming regulators in states where Caesars and Eldorado operate properties.
However, the coronavirus stormed through the United States casino and hospitality sectors in an unprecedented manner, grinding commercial casino operations to a halt and forcing regulatory bodies to put the $17.3 billion merger on the back burner.
Reports emerged over the past several weeks that the coronavirus crisis could change the way regulators view the massive debt that goes along with the Caesars-Eldorado combination and eventually derail the deal.
Caesars and Eldorado await approval from Indiana, Nevada and New Jersey regulators.
The Federal Trade Commission also needs to sign off on the merger.
Nevada’s Gaming Control Board chair Tony Alamo said the regulator is still investigating the deal and that it “is going like any other merger. It’s just going through the process, which includes a normal investigation.”
Caesars and Eldorado previously expected to close the deal by mid-April, but according to multiple sources, this is now likely to happen in June.
The Nevada Gaming Control Board’s next meeting is scheduled to take place in April.
In New Jersey, the state Casino Control Commission is likely to hold its next meeting on May 13.
A highly placed source told CNBC that both casino operators have enough liquidity to last for well over a year, even though their properties across North America are currently closed and will remain closed for an unspecified time.
According to the source, Caesars currently has $3 billion on its balance sheet.
The recent sale of its Rio All-Suite Hotel and Casino property in Las Vegas for $640 million provided the company with additional cash.
If Eldorado closes a $230 million sale of two casinos in Mississippi and Missouri to Twin River Worldwide Holdings in the coming two months, it would head into the Caesars combination with $850 million on hand.
On March 17, Nevada Governor Steve Sisolak ordered a statewide 30-day casino shutdown as part of a set of measures imposed to curb the spread of the coronavirus.
The dangerous virus is raging across the United States, but some Caesars properties in Nevada have begun taking reservations.
The company’s Flamingo Las Vegas property tweeted last night that they are “currently taking reservations for April 17th and beyond, but the situation remains fluid.”