Harrah’s Laughlin

Eldorado Resorts announced Monday it is purchasing Caesars Entertainment, the parent company of Harrah’s Laughlin, in a deal worth $17.3B. Eldorado, which owns the Tropicana Laughlin, will take on the Caesar names. It also will sell and lease back Harrah’s Laughlin and two other Harrah’s properties from a real estate trust formed as part of Caesars’ bankruptcy reorganization in 2017.

LAUGHLIN — Harrah’s Laughlin has a new family. And a new landlord.

In a blockbuster deal announced Monday, Eldorado Resorts is purchasing Caesars Entertainment — the parent of Harrah’s Laughlin — to create the largest gambling operator in the United States.

The deal, valued at $17.3 billion, is scheduled to close next year. It transfers Caesars’ holdings to Eldorado, with the new company to be known as Caesers, operating 60 casino-resorts in 16 states.

The transaction values Caesars at about $8.6 billion, and Eldorado will pick up about $8.8 billion of the company’s debt. Caesars has been struggling since emerging from bankruptcy in 2017. Billionaire investor Carl Icahn took an enormous stake in the company and pushed for big changes.

Icahn in April appointed Caesars Entertainment’s current CEO, Tony Rodio, who had the same role at the billionaire’s Tropicana Entertainment, which was sold to Eldorado in 2018. He also got to pick board members.

“While I criticized the Caesars Board when I took a major position several months ago, I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction,” Icahn said in a prepared statement Monday. “As a combined company, Caesars and Eldorado will be America’s preeminent gaming company.”

The bankruptcy reorganization led to the creation of the real estate investment trust VICI Properties Inc. It owns the 

buildings and land of more than 20 casino-resorts, including Caesars Palace on the Las Vegas Strip, and leases the operations back to casino operators. It will enter the same arrangement with Harrah’s Laughlin as well as two other Harrah’s properties.

VICI Properties Inc., also is buying real estate associated with Harrah’s Resort in Atlantic City, New Jersey, and Harrah’s New Orleans Hotel and Casino. That deal gave Eldorado Resorts about $1.8 billion in exchange for long-term lease agreements for the three Harrah’s properties, which will pay VICI an estimated $154 million annually in rent payments.

“The only specific effect it has on Harrah’s Laughlin ... is the underlying real estate transaction,” said Stephen Cohen, of Teneo Holdings LLC, a communications and advisory firm that represents Caesars. “Operationally, it will be part of the combined Caesars.”

He said the agreements accomplished two things for all the involved parties.

“It’s two substantial entertainment companies merging. That’s part one,” Cohen said. “You’re combining these two companies and, hopefully, getting a better, stronger and more efficient company going forward.”

The second component — the lease agreement between VICI and Eldorado Resorts — was a “financing method” that helped Eldorado enter the agreement without taking on additional debt.

Investors welcomed news of the deal: Shares of Caesars rose 16% in Monday trading. Eldorado stock fell 10%.

“We are incredibly excited. This is an iconic brand,” Eldorado CEO Tom Reeg said referring to Caesars Entertainment during a conference call. “It’s really a level of property and brand that we have not had the great fortune to control and now we will.”

Reeg told analysts and investors the company expects to sell some properties that may allow it to avoid federal anti-trust issues. It is also evaluating whether to sell properties on the Las Vegas Strip.

“As I sit here today, I tell you, I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” he said. “So, I would expect that we would be a seller of a Strip asset, but that decision has not been made.”

Harrah’s Laughlin ownership will give Eldorado two properties in Laughlin, joining Tropicana Laughlin. The company completed purchase of Tropicana Entertainment’s gaming and hotel operations last year. Icahn was involved in that deal, too; Icahn Enterprises was majority owner of Tropicana Entertainment.

The Tropicana Entertainment purchase also involved a buy-lease agreement with the real estate going to Gaming and Leisure Properties. 

The Associated Press contributed to this report.

 

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