Caesars is reportedly more interested in acquiring Jack Entertainment properties than Tilman Fertitta’s merger offer
Caesars Entertainment Corp. has chosen to reject an offer from billionaire gaming boss Tilman Fertitta that would have seen his own empire merge with the Las Vegas gaming and hospitality giant, the New York Post reports.
News emerged last week that Mr. Fertitta, who owns the Golden Nugget hotel and casino chain and the Landry’s hospitality and entertainment chain, has approached Caesars with a merger offer amid a wave of consolidation across the US land-based casino industry.
Sources believe that Caesars’ board, which includes equity firms Apollo Management and TPG, will unanimously decline the offer, as a deal of this kind would burden the company with additional debt at a time it is looking to reduce its existing one. Caesars emerged last fall from a lengthy and complex Chapter 11 bankruptcy case, which was triggered by the company’s $25 billion debt load from its 2008 leveraged buyout. The casino operator’s debt currently amounts to around $9 billion.
Caesars’ shares soared 18% over two days after reports about Mr. Fertitta’s offer surfaced last week to close at $10.20 on Friday. Caesars’ market cap now stands at $6.8 billion, while Mr. Fertitta’s fortune is estimated by Forbes at around $4.5 billion.
Caesars in Talks to Acquire Jack Entertainment Properties
While Mr. Fertitta’s offer for a reverse merger that would have seen Caesars acquire the businessman’s casino empire has not been found particularly attractive, separate reports have emerged that the Las Vegas giant has been in talks to acquire several Jack Entertainment properties.
Jack currently owns six hotel and casino properties in Michigan and Ohio. The deal could be worth over $1 billion, according to unnamed sources close to the ongoing talks.
Sources have also revealed that hedge funds, including Canyon Partners, which has a 10% stake in Caesars, and HG Vora Capital, which had quietly built a 4.9% stake in the gaming giant, have been looking to derail the Jack deal, while they have supported the reverse merger with Mr. Fertitta’s casino chain.
According to sources, hedge funds are hoping that the merger report would put the Jack talks on hold. However, it is believed Caesars’ board is adamant that the deal for the acquisition of Jack casino properties should be completed.
Under the terms of the discussed transaction, Caesars would buy the gaming operations of the properties, while its REIT, VICI Properties, would acquire the land occupied by the casinos and lease it back to the properties themselves in a long-term deal.
Expanding its portfolio across the United States and internationally is part of Caesars post-bankruptcy growth strategy. The company recently acquired two casino and horse racing tracks from Indiana-based Centaur Holdings in a $1.7-billion deal.
According to company insiders, the Jack deal could be particularly important to Caesars’ CEO Mark Frissora. His contract expires in February, but it is believed that the completion of the Jack transaction could be instrumental for his continued leadership.
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