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Carl Icahn Backs Eldorado Resorts’ $8.6 Billion Deal for Caesars Entertainment

Eldorado Resorts Inc. is buying Caesars Entertainment Corp. for about $8.58 billion in a deal backed by activist billionaire Carl Icahn that will create the largest U.S. gaming operator.

The agreed equity value of $12.75 a share — in a mix of cash and Eldorado stock — represents a premium of about 28% to Caesars’s Friday closing price. Including debt, the deal is worth approximately $17.3 billion, the companies said in a statement.

Caesars shares rose 13% to $11.25 in pre-market trading as of 8:06 a.m. in New York. Eldorado dropped 6.8%.

Casino and hotel operator Caesars had been pushed to consider a sale by Icahn, its biggest shareholder according to data compiled by Bloomberg. Earlier discussions had focused on a deal that would have valued Caesars at $11 a share, a person familiar with those talks had said.

Caesars, whose properties include the flagship Caesars Palace and the Harrah’s chain, is still coping with the fallout of a 2008 leveraged buyout led by Apollo Global Management LLC and TPG that left it with a mountain of debt. The company completed a bankruptcy of its largest unit two years ago that brought in new board members and shareholders, including distressed-debt investors. Apollo and TPG have sold their shares.

Property Deal

Eldorado and Caesars said they have identified benefits of $500 million by creating a company with 60 owned, operated and managed casino–resorts across 16 states, and expect the deal to boost cash flow immediately. A parallel agreement will see VICI Properties Inc. acquire some of the companies’ real estate, generating $3.2 billion of proceeds to help pay down debt.

Eldorado’s management team will lead the new company, which will continue to operate under the Caesars name and to trade on the Nasdaq Global Select Market.

“We intend to allocate the significant free cash flow from the combined company

Article source: http://fortune.com/2019/06/24/eldorado-caesars-carl-icahn/

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