Tilman Fertitta, owner of Golden Nugget casinos and Landry’s Inc., contacted Caesars Entertainment Corp. about a possible merger, according to reports.
Golden Nugget is a casino chain that operates the brand in Louisiana, Mississippi, Nevada and New Jersey. Fertitta also owns Landry’s Inc., a nationwide restaurant chain that operates dozens of brands.
Fertitta is the sole owner and CEO of both companies. He also owns the Houston Rockets NBA team.
Caesars Entertainment stock jumped on the news. It closed up 12 percent to $10.20 on Wednesday, the day of the announcement. It maintained that price in a down market on Thursday. The offer from Fertitta is reported to be $13 per share.
Golden Nugget and Caesars Entertainment compete in four markets
Caesars Entertainment overlaps four of Golden Nugget’s five gaming markets. Golden Nugget operates a casino in downtown Las Vegas, while Caesars Entertainment owns nine casinos in the market. Eight of those are on the Las Vegas Strip. Each company owns a casino in Laughlin, Nevada and Biloxi, Mississippi.
Golden Nugget has an Atlantic City property on in the Marina District across the street from Harrah’s, a Caesars property. Caesars also owns Bally’s and Caesars resorts in that market on the Boardwalk.
Golden Nugget has a casino in Lake Charles, Louisiana. That gaming market is closest to Houston. Golden Nugget controls about 40 percent of Lake Charles’ gross gaming revenues. The closest Caesars Entertainment property to Lake Charles is Harrah’s New Orleans.
Sluggish Vegas Strip business likely caused Caesars’ stock declines in 2018
Caesars Entertainment’s stock was down 28 percent year-to-date before the announcement. That’s likely due to declining profits on the Las Vegas Strip this year and future consensus numbers based on company guidance. Golden Nugget is privately held.
Under the plan, Fertitta would become chairman and CEO of the newly formed company, according to Reuters. The land and buildings would go into a real estate investment trust. Caesars Entertainment’s current shareholders would take that cash from the real estate sale to acquire equity in the new company. Fertitta would be the proposed company’s largest shareholder.
Caesars Entertainment went into bankruptcy in 2015. This was due to carrying $25.6 billion in debt. Much of this was created through the 2008 leveraged buyout of the company. Caesars Entertainment emerged from bankruptcy in 2017 with about $9.6 billion in debt.
World Series of Poker likely part of the proposed deal
The World Series of Poker is owned by Caesars Interactive Entertainment, a wholly-owned subsidiary of Caesars Entertainment. The interactive unit operates WSOP.com, a legal online poker site that services Nevada and New Jersey. The WSOP.com platform also networks with Delaware Lottery’s poker sites. All use 888 software.
The companies involved in the report have not commented on the story.
