One of the biggest names on the Las Vegas Strip is changing hands. On Thursday, May 28, Fertitta Entertainment announced it had reached a deal to buy Caesars Entertainment in an all-cash transaction valued at about $17.6 billion, in what would be the largest casino takeover in U.S. history. The buyer is billionaire Tilman Fertitta, the Houston restaurant-and-casino mogul who already owns the Golden Nugget casinos, the Landry’s restaurant empire and the NBA’s Houston Rockets.
Under the agreement, Caesars shareholders will receive $31.00 in cash for each share they own. That is a 49% premium over where the stock traded on February 25, the last day before rumors of a deal began to swirl. The price tag includes roughly $5.7 billion in equity and the assumption of about $11.9 billion of Caesars’ existing debt. The Caesars board approved the deal unanimously and is urging shareholders to vote yes, calling the offer “compelling.”
Tilman Fertitta is one of the more colorful figures in American business. He built Landry’s from a single seafood restaurant into one of the country’s largest hospitality and dining companies, owns the Golden Nugget casino brand, and currently serves as the U.S. ambassador to Italy and San Marino. Buying Caesars dramatically expands his empire: the combined company would run about 60 resorts worldwide, including the eight Caesars properties along the Strip such as Caesars Palace, the Flamingo and The Linq.
Day-to-day, much would stay the same. Caesars chief executive Tom Reeg, chief financial officer Bret Yunker and president and operating chief Anthony Carano are all expected to keep their jobs. The Carano family, which holds roughly 5% of Caesars, agreed to roll part of its stake into the new, combined business rather than cash out.
The purchase is not contingent on financing, which signals confidence the money is in place. Fertitta Entertainment is paying with a mix of its own equity, the assumed Caesars debt, and new debt arranged by a group of 10 banks. Morgan Stanley and Goldman Sachs are advising Fertitta, while PJT Partners is advising Caesars. Once the deal closes, Caesars stock will stop trading on the Nasdaq and the company will go private — meaning ordinary investors will no longer be able to buy a piece of it.
The agreement includes what is known as a “go-shop” period running through about July 11, during which Caesars and its advisers are free to look for a better offer. If another bidder emerges with a higher price, the board can consider it. Such windows rarely produce a competing deal, but they let the board show shareholders it sought the best possible terms.
The timing reflects where the casino business sits right now. The biggest operators carry heavy debt loads from years of building and buying, and taking a company private gives new owners room to reshape it away from the quarter-to-quarter pressure of the stock market. For Fertitta, owning both Golden Nugget and Caesars creates a hospitality giant spanning Las Vegas, Atlantic City, regional casinos and a large online betting operation, since Caesars also runs a sports-betting, online-casino and poker platform.
For the tens of thousands of people who work at Caesars properties, a buyout like this usually brings a close look at costs, even as the buyer promises a smooth transition. For customers, the company says the merger will mean a wider range of destinations and rewards across more resorts. And for the gambling industry, the deal is a marker of how much money is still flowing into Las Vegas and regional gaming — a single owner is willing to spend $17.6 billion betting that Americans will keep coming to the tables.
The deal still needs approval from Caesars shareholders and from gaming and antitrust regulators, a process that can take many months. If it clears, the house that grew into one of the Strip’s defining brands will belong to one of the most aggressive dealmakers in American hospitality.
JBizNews Desk
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