After completion of the transaction in 2020, Eldorado will be the biggest casino operator in the U.S.

Thanks to Carl Icahn’s activism, and an $8.58 billion acquisition kitty, Eldorado is in the driver’s seat in US casino operations. It will soon have Caesars in its fold.

After touching a low of $35.41 on September 3, Eldorado shares closed at $52.06 on November 15, up 47%.

With shareholders at both companies approving the deal, it is likely to be completed in the first half of 2020, subject to regulatory formalities.

Eldorado + Caesars: Activism and activity on the Strip

Carl Icahn played his cards perfectly when he assumed the role of an activist shareholder in Caesars Entertainment earlier this year. He moved into the debt-laden Caesars at sub-$9 levels and established a large stake. That gave him three board seats. He added deal-friendly CEO Tony Rodio in April and pushed for a sale of Caesars.

Eldorado and Icahn seem to have played a repeat formula of the Tropicana deal concluded last year. Eldorado then paid $1.85 billion to Icahn Enterprises for Tropicana Entertainment. No prizes for guessing who the Tropicana CEO was. Yup, Tony Rodio.

Apart from paying out $8.58 billion in cash and stock, Eldorado will also assume $8.8 billion of Caesars debt. Synergy savings are expected to be about $500 million in the year following the consummation of the deal.

Eldorado CEO Tom Reeg said the company would sell a property on the Strip, so far, unnamed.

Meanwhile, casino REITs are stepping up deal-making in Vegas, and analysts are indicating good pickings for these vehicles in the future. This analysis follows a re-rating of property valuations after some recent transactions.

Bellagio, a casino resort owned by MGM Resorts, sold last month to The Blackstone Group in a $4.2 billion deal. MGM leased it back for an annual rent of $245 million. MGM Resorts will continue to operate the Bellagio, therefore.

Eldorado: Upping the gambling ante

Eldorado had just two properties to its name in 2014.

Fast-forward five years later: After the consummation of the merger, Eldorado-Caesars will own and operate 60 casinos across 16 states.

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