Fertitta Bets on Caesars With $5.7B Acquisition

Fertitta Entertainment Inc. is expanding its global gaming and hospitality holdings with the acquisition of Caesars Entertainment Inc., in an all-cash transaction for $5.7 billion. The deal calls for Fertitta to assume approximately $11.9 billion of Caesars’ outstanding debt, creating a total transaction value of about $17.6 billion.

If approved, the transaction combines two iconic and complementary platforms to create a large suite of gaming, entertainment, and restaurant brands. Caesars owns and operates 52 resorts and casinos across 18 U.S. states and Ontario, Canada, under the Caesars, Harrah’s, Eldorado and Horseshoe brands, along with managing a retail and online sports-betting platform.

The company has nine properties in Las Vegas, such as Caesars Palace, Planet Hollywood, Horseshoe Las Vegas and Harrah’s Las Vegas, as well as Nevada assets in Lake Tahoe, Reno and Laughlin. Other major locations include New Orleans, and Atlantic City, N.J.

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Houston-based Fertitta Entertainment owns more than 600 properties in 15 countries, including the Golden Nugget Hotel and Casino concept, with locations in Las Vegas, Lake Tahoe and Laughlin in Nevada, and Atlantic City, N.J., among others.

Ferlitta’s Landry’s Inc. restaurant portfolio includes McCormick & Schmick’s, Del Frisco’s Double Eagle Steakhouse, Morton’s The Steakhouse, Bubba Gump Shrimp Co. and Rainforest Café. It also owns luxury hotel properties, entertainment venues—including the Denver Aquarium—and River Oaks District, a luxury retail and mixed-use complex in Houston.

Fertitta Entertainment is billionaire Tilman Fertitta and former wife Paige Fertitta’s holding company for substantially all their assets, including the NBA’s Houston Rockets. Tilman Fertitta is also currently serving as the U.S. ambassador to Italy and San Marino.

Once the deal closes, Fertitta Entertainment will take Caesars private. The company currently trades on Nasdaq.

Leadership team to stay

The planned acquisition by Fertitta Entertainment comes nearly six years after Caesars Entertainment Corp. and Eldorado Resorts Inc. completed a $17.3 billion merger. At the time, Tom Reeg, CEO of Caesars and the former Eldorado CEO, called that transaction a transformative merger.

Reeg and other top corporate management and property management executives—including CFO Bret Yunker and Anthony Carano, president and chief operating officer—are expected to remain in their roles and continue to lead Caesars Entertainment operations at the combined company.

Caesars Entertainment advisors include PJT Partners serving as exclusive financial advisor,   Latham & Watkins as legal counsel, and Skadden, Arps, Slate, Meagher & Flom LLP serving as antitrust counsel.

Freshfields is the counsel to the Carano family. Fertitta Entertainment’s advisors are Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC serving as financial advisors and White & Case LLP providing legal counsel.

Financial breakdown of pending deal

The transaction will be financed through a combination of Fertitta Entertainment equity, assumed Caesars’ debt and new debt financing arranged by a group of 10 banks. The banks were not identified.

When word spread earlier this year about a pending deal, Fertitta reportedly was offering about $34 per share, placing the deal value at about $7 billion. Under the terms of the definitive agreement announced yesterday, Caesars’ shareholders will receive $31 in cash per share.

The price represents a 49 percent premium over Caesars’ share price on Feb. 25, the last trading day before rumors of a potential sale surfaced. It’s also a 46 percent premium over the unaffected 30-day volume-weighted average price on the same date.

The Caesars Entertainment board of directors is backing the proposed merger, which must also be approved by Caesars’ shareholders. The Carano family, which owns approximately 5 percent of the outstanding shares of Caesars Entertainment common stock, has agreed to roll a portion of their equity interests into Fertitta Entertainment.

The company will also need to gain regulatory approvals before a takeover can occur. Since the Fertitta holdings include a large stake in betting firm DraftKings, the deal may raise antitrust concerns, according to Bloomberg.

The agreement includes a “go-shop” period through July 11, which allows Caesars to consider other offers. The Wall Street Journal reported in March that billionaire Carl Icahn’s firm, Icahn Enterprises, had also been interested in Caesars before Fertitta Entertainment topped its offer and the two entities entered into exclusive negotiations. Fertitta’s interest in Caesars reportedly dates back to at least 2018, according to numerous outlets.