Billionaire Tilman Fertitta has agreed to buy US casino giant Caesars Entertainment in a bumper $17.6B deal. This record-breaking deal is the largest casino acquisition to ever occur in the US, but the all-cash takeover still has some way to go before it is finalized.
Caesars will enjoy a so-called go-shop period, lasting until July 11, allowing the company to consider any other offers. However, it is understood that the Caesars board has voted unanimously to accept the all-cash deal.
Caesars' empire
One of the biggest casino brands in the US, Caesars has more than 50 casino resorts, primarily in the US, with some destinations in Canada and the UAE. It also has an iGaming and online sports betting arm, as well as more than 200 retail sportsbook locations.
Caesars was acquired by Eldorado Resorts in 2020, with the latter changing its name to Caesars Entertainment on completion of the deal.
Since then, the company has suffered challenging times. As well as temporary closures of its casinos in 2020 and 2021, it has fallen behind in the online gambling industry, while diminishing Las Vegas visitor numbers have hit retail casino revenues.
In Q1 this year, as rumors of an acquisition had started, Caesars reported flat earnings. Las Vegas revenue was roughly stable at $1B. Regional revenue was up 3%, but EBITDA was down 1% to $435M.
The company did report strong performance for Caesars Digital. In what was described as the online arm's best quarter ever, the company reported revenue of $374m, up 11% compared to the previous year.
The Fertitta deal
Fertitta Entertainment is one of the largest privately owned hospitality empires. It has more than 600 locations in the US and across 15 other countries. The Golden Nugget Hotel and Casino brand makes up part of the company's portfolio. It currently operates eight casino hotels, all in the US.
This deal brings together two of the largest and most recognizable brands in the country, hence the sizable $17.6B price tag. The acquisition has been ongoing for several months, with Fertitta facing competition from fellow billionaire Carl Icahn.
However, the Fertitta deal has come out on top. The deal values Caesars at $31 per share, which is a 49% premium compared to the February 25 price, the day before rumors started swirling.
It will also see Fertitta take on $11.9B of existing debt, and the executive leadership team is set to remain in place. That combination of factors has led the Caesars Board of Directors to vote unanimously in its favor. They have recommended shareholder approval, which is likely to come, thanks to the premium share price.
Fertitta has called on a group of 10 banks to help with financing the acquisition, with Fertitta Entertainment footing the rest of the bill.
The size of the two groups, combined with Fertitta's existing, albeit comparatively small, casino empire, means the deal will be subject to regulatory scrutiny.
