Caesars Entertainment shareholders approved a $17.6 billion deal from Tilman Fertitta’s holding company, paving the way for a mega casino merger.
Key Takeaways:
- Fertitta Entertainment and the Caesars Board agreed to the merger in May.
- Caesars shareholders approved the deal and the vote was filed with the SEC on Wednesday.
- The merger still must be approved by state and federal regulators.
Caesars shareholders approved the merger with Fertitta Entertainment, with 65.4% voting in favor of the deal. The results were filed with the Securities and Exchange Commission on Wednesday.
The Texas-based billionaire Tilman Fertitta and Caesars Entertainment had been negotiating a potential deal since February. In May, Caesars’ Board of Directors agreed to an all-cash deal of $31 per Caesars share and the assumption of Caesars’ hefty $11.9 billion debt. All told, the deal is worth roughly $17.6 billion.
Fertitta currently owns casinos in five states, the Landry’s restaurant chain, NBA’s Houston Rockets, and the soon-to-be WNBA Houston Comets. Meanwhile, Fertitta is also currently serving as the U.S. Ambassador to Italy.
Due to Caesars' large debt, much of it dating back to its 2008 leveraged buyout and the 2020 Eldorado merger, it has been more challenging for it to show a profit. In the second quarter, however, it was able to reduce its losses to $62 million by generating $3 billion in revenues.
Caesars shareholder approval is just one of the steps needed to finalize the deal between the two casino juggernauts. The deal will have to be approved by more than a dozen state gaming regulators. The deal will also need to be approved by the U.S. Federal Trade Commission (FTC), which will address any anti-trust issues.
Since Fertitta is an experienced casino operator in good standing, state regulatory approvals might take time but shouldn’t be an issue. The anti-trust review, however, could be a bit more involved.
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FTC approval may require casino property sales
There is some regional overlap between the two companies and the FTC will need to examine if the merger would result in anticompetitive business practice in these regions. Areas that might come under scrutiny include Atlantic City, NJ, Stateline, NV and the Las Vegas Strip.
In some cases, the FTC might require a casino, or casinos, to be sold to a third party to maintain competition. For instance, when Eldorado Resorts and Caesars Entertainment merged in 2020, the FTC required the sale of three casinos prior to its approval.
The FTC made a second request for information regarding the Fertitta and Caesars merger on Sept. 14. Overall, the merger is estimated to complete by mid-2027.
No double wedding for casino giants
Caesars wasn’t the only casino mega-merger in the works this year. Caesars’ main competitor on the Las Vegas Strip was also being courted for acquisition. MGM Resorts International, however, was recently left at the altar.
Barry Diller, who currently owns 27% of MGM, offered to buy out the remaining stake at $48.30 per share, valuing the company at $18 billion.
On Wednesday, however, Diller dropped his bid, stating, “There are lots of ingredients that go into a proposal of this kind on its way to completion. We didn’t feel the mix was coming together in the way we had hoped and have decided not to pursue taking the company private at this time.
