Reports suggest that Tilman Fertitta, who owns Golden Nugget casinos and Landry’s Inc., reached out to Caesars Entertainment Corp. regarding a potential merger.
Golden Nugget, a casino chain operating in Louisiana, Mississippi, Nevada, and New Jersey, is owned by Fertitta. He also owns Landry’s Inc., a nationwide restaurant chain that runs numerous brands.
Fertitta solely owns and serves as the CEO of both companies, and he also owns the NBA team, the Houston Rockets.
The stock of Caesars Entertainment experienced a surge following an announcement, closing at $10.20 on Wednesday, an increase of 12 percent. It held steady at this price on Thursday, despite a declining market. Fertitta’s reported offer stands at $13 per share.
Golden Nugget and Caesars Entertainment compete in four markets
Four out of five gaming markets of Golden Nugget intersect with those of Caesars Entertainment. Golden Nugget manages a casino in downtown Las Vegas, in contrast to Caesars Entertainment which possesses nine casinos in the same market, eight of which are located on the Las Vegas Strip. Both companies have a casino each in Laughlin, Nevada and Biloxi, Mississippi.
Golden Nugget owns a property in the Marina District of Atlantic City, situated across the street from Harrah’s, which is owned by Caesars. Additionally, Caesars owns Bally’s and Caesars resorts located on the Boardwalk in the same market.
Golden Nugget operates a casino in Lake Charles, Louisiana, a gaming market that is nearest to Houston. It holds approximately 40 percent of the gross gaming revenues from Lake Charles. The nearest property of Caesars Entertainment to Lake Charles is Harrah’s New Orleans.
Sluggish Vegas Strip business likely caused Caesars’ stock declines in 2018
Before the announcement, Caesars Entertainment’s stock had decreased by 28 percent year-to-date, likely as a result of falling profits on the Las Vegas Strip this year and future predictions based on company guidance. Golden Nugget, on the other hand, is a privately-owned company.
According to the plan, Fertitta is set to become the chairman and CEO of the newly established company, as reported by Reuters. The land and buildings are to be transferred into a real estate investment trust. The current shareholders of Caesars Entertainment will use the cash from the real estate sale to acquire equity in the new company. Fertitta is slated to be the largest shareholder of the proposed company.
Due to an accumulated debt of $25.6 billion, largely resulting from the 2008 leveraged buyout of the company, Caesars Entertainment filed for bankruptcy in 2015. The company managed to come out of bankruptcy in 2017, albeit still burdened with around $9.6 billion in debt.
World Series of Poker likely part of the proposed deal
Caesars Interactive Entertainment, a fully-owned branch of Caesars Entertainment, owns the World Series of Poker. This interactive division manages WSOP.com, a legitimate online poker site serving Nevada and New Jersey. WSOP.com also collaborates with poker sites of the Delaware Lottery. They all utilize 888 software.
The businesses implicated in the report have refrained from commenting on the story.
