Caesar’s Imperial Gaming Rule
It’s official. Gambling house Eldorado has just captured Caesar’s Palace, turning it into its own. As sports betting is legalized across the States, this creates a new front runner for investors to bet on.
For the everyday price of 17 billion dollars, Eldorado has more than doubled its size. It will also be renamed after its takeover target. Caesar’s have been looking for a buyer since 2015 when the company filed for Chapter 11. Drowning in debt, missing out on the Asian gambling boom, and seeing its cash reserves run thin, someone by the name of Carl Icahn got involved. It became entrenched management versus motivated billionaire in an all-out boardroom war. But what happens in Vegas, stays in Vegas.
Now, the bright lights of Caesar’s famous Vegas landmarks are well and truly sparkling. Carl Icahn has heaped praise on his business partners for sealing this deal, and according to him, “one plus one equals five.” Now that’s what investors like to hear!
On Eldorado’s side of the transaction, it’s not all sunshine and rainbows. Caesar’s Palace is still a company under a mountain of debt. News of this buyout collides with an all-time high stock market that faces slowing growth, posing a risk of the economy going south. Perhaps then, not an ideal time for Eldorado to saddle itself with the debt payments of a larger firm. Eldorado stock fell 9% when this story broke.
But consolidation is becoming an impossible trend to buck in the gaming industry. Owing to an invasion of competition for newly permitted sports bettors, this surely won’t be the last big deal that combines titans. If there was ever a good time to play the team game, it’s now. So watch Wynn Resorts and MGM Grand very closely to see how they plot their next moves.
