Caesars Turns Down a Merger Offer from a Big Tycoon Giant

Caesars Entertainment Tilman Fertitta DealThe popular casino operator Caesars Entertainment has turned down a significant merger proposition from a big tycoon giant by the name Tilman Fertitta.

Tilman Fertitta is the owner of Golden Nugget Casino and Landy’s Entertainment. He went with a compelling offer to the casino operator, but his offer was declined.

This new partnership deal would require Caesars Entertainment to take a significant amount of loan when the company is trying its best to curtail the debt level.

In 2017, the casino operator was embroiled in a long-running and complicated bankruptcy case resulting from a $25 billion cache of debt from a buyout. At the moment, Caesars Entertainment is having a liability of approximately $9 billion in its account books.

What’s In Future for Caesars Entertainment?

When the offer from the tycoon businessman broke out in the market, the share prices of Caesars jumped by 18% within 2 days and rose to $10.20 with a market cap close to $7 billion marks. The net worth of Tilman Fertitta is approximately $4.5 billion, and he is the owner of Houston Rocket team in National Basketball Association.

The offer from Fertitta was for a reverse merger where Caesars would acquire the casino holdings. Although Caesars is interested in obtaining some of the Jack Entertainment locations, the offer is not attractive.

Jack Entertainment is the owner of 6 casinos and other hotels in Michigan and Ohio. If the partnership deal were not declined and went through, the net worth would have been around $1 billion.

Few Caesar's stakeholders are trying to obstruct the deal with Jack Entertainment. These stakeholders hold 15% of shares in the casino operator. Many people thought that the agreement for the potential merger was announced, the deal with Jack Entertainment would be called off. But it seems that several Board of Directors wants to proceed ahead.

Under the proposed partnership deal, Caesars Entertainment would buy the gaming operation of each of the casinos of Jack Entertainment. The casino operator is now looking forward to expanding its current profile in the United States and foreign countries. It is a part of the plan to grow from their bankruptcy proceedings.

One of the most significant deals of Caesars Entertainment was the acquisition of the two horse racing tracks and casinos which are owned by Centaur Holdings in the state of Indiana. The new partnership deal is reported to be worth $1.7 billion.

The work contract of Mark Frissora, who is the present CEO of Caesars Entertainment, would be completed in February 2019. So he is excited about the new deal with Jack Entertainment because it would put him in an excellent position to continue his existing role of CEO.

State of Casino Sector

The outlook in the casino industry of USA is quite bearish with most of the focus on Las Vegas which is the capital of gaming in the country.

Although Las Vegas gets a hike in gambling revenues during big events like UFC fights etc., the level of gamblers and other visitors are on the decline lately. In the past several months, the strip casinos are not performing well with a significant drop in revenue.

With such a healthy level of economic growth and ample job opportunities, the decline in the gambling revenues is somewhat surprising and not expected. The casinos in Las Vegas are optimistic for a good performance in the fourth quarter with some significant events coming up. It would be interesting to note if the casinos are able to rebound themselves in the final quarter of the FY 2018-19 or not.


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