Some pairings undeniably go together: the Mojave Desert and sunblock, steak and eggs, Donny & Marie, corporations and monopolies.
In June 2019, American hotel and casino entertainment company Eldorado Resorts announced that it will acquire all of Caesars Entertainment Corporation’s outstanding shares – a deal worth approximately $17.3 billion.
The Federal Trade Commission approved the merger earlier this month. The new Caesars is now the largest casino company in the world. They will own and operate more than 55 casino properties worldwide, including eight properties on the Las Vegas Strip.
Eldorado Resorts started in 1973 with a single family-owned hotel-casino in Reno, they now hold 51 percent of the combined company’s outstanding shares. Eldorado also agreed that the merged company will assume Caesars’ approximately $8.8 billion in debt.
The company will continue operations and stock trading under the iconic Caesars Entertainment name moving forward. They unveiled a new logo to consummate the merger.
The new Caesars will have to navigate a challenging economic environment due to the COVID-19 pandemic. How will this unification affect patrons, employees, and the industry as a whole? We’ve got the answers.
What Las Vegas Properties are Involved?
The new Caesars will operate Caesars Palace, Harrah’s Las Vegas, Flamingo, Bally’s, The Linq Hotel, The Cromwell, Paris Las Vegas, Planet Hollywood and Rio.
Eldorado promised not to close Caesars, Harrah’s and the Tropicana — for at least five years. It also says it will spend $400 million improving them over the next three years and reinvest 5% of revenue annually after that.
However, Eldorado CEO Thomas Reeg said that there could be reduction of the company’s Las Vegas assets.
“I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” Reeg said on the call. “So I would expect that we would be a seller of a Strip asset, but that decision has not been made.”
Chief Financial Officer Bret Yunker parroted Reeg’s statement, stating, “We’ve had a view that managing over 20,000 rooms, just from a strategic perspective, isn’t ideal for the combined company.”
“We’re still going to be thinking through when the right time is to potentially divest one Strip asset. Some of that will be driven by what’s happening in the world, in Las Vegas and with the virus.”
Will there be layoffs?
Earlier this year, both Caesars and Eldorado had massive layoffs as a result of the coronavirus pandemic. Unfortunately, the merger will result in a further reduction of jobs.
Chief Financial Officer Bret Yunker said the company plans to make cuts as “compassionately and transparently as possible.” He was not specific about how many jobs would be eliminated or where the reductions will happen.
The Customer Experience
The new company’s future will mainly focus on U.S. gambling operations, and maintaining the same “family-style service” that has served patrons since the original Eldorado Hotel opened in Reno in 1973.
Caesars Rewards will be solidified as the largest loyalty program in the industry with over 60 million members. This will provide more benefits to current and future Caesars Rewards members, offering more ways to play and earn reward credits and experiences.
Who is in Charge?
Thomas Reeg, the Chief Executive Officer of Eldorado resorts will be the head of the new Caesars.
Caesars CEO Tony Rodio is staying on in an advisory position. This is not his first rodeo, in the draconian conglomerate merger biz. Rodio was a key figure in Eldorado’s last major purchase, a $1.85 billion procurement of Tropicana Entertainment Inc. Rodio was the CEO of Tropicana at the time.
Gary Carano, son of the late Don Carano, who opened the original Eldorado Hotel Casino, will act as the Executive Chairman of the merged company’s board of directors. Anthony Carano, Gary’s son, and nepotism beneficiary, will serve as the Chief Operating Officer.
Billionaire investor Carl Icahn is now the largest single shareholder of the company, owning more than 10% of the new Caesars. Ichan acquired a large block of old Caesars shares after the company emerged from bankruptcy protection in late 2017.
What About that Global Pandemic?
The merger was supposed to be completed in early 2020 but was delayed as both parties scrambled to deal with the impact of the COVID-19 pandemic, wreaking havoc on the tourism industry, decimating casino revenues,
In late March, Nevada Governor Steve Sisolak ordered the closure of all non-essential businesses in the state in late March. Nevada casinos were closed until being allowed to reopen starting on June 4.
The merger process was expedited due to the reports that Eldorado Resorts has been paying Caesars about $2.3 million a day (10 cents a share per month, prorated) “ticking fees” until the deal is done since March, according to Vital Vegas.
Nevada Governor Steve Sisolak ordered all casinos closed in mid-March to help curb the spread of the virus. They were allowed to start reopening June 4.
Planet Hollywood, The Cromwell, and the Rio have not resumed operations.