ldorado Resorts Chief Executive Thomas Reeg told analysts Tuesday that the company expects to close the acquisition deal in the first half of 2020, and that any sale of a Strip property won’t be announced before then.
Casinos rarely go up for sale on the Strip. In a recent exception, Blackstone Group LP is considering selling the Cosmopolitan hotel and casino with an anticipated price of around $4 billion, The Wall Street Journal recently reported.
Caesars has a big presence on the Strip, including Caesars Palace, Harrah’s and Planet Hollywood, among others.
Eldorado Resorts operates casinos in Reno, Atlantic City, N.J., and smaller markets in Colorado, Mississippi, Missouri, Louisiana, and other states. After the completion of the $8.58 billion acquisition deal, the combined entity would be the largest casino company in the U.S., operating under the Caesars name with about 60 casinos in 16 states.
As part of the merger, other casinos not on the Las Vegas Strip will likely also be sold due to antitrust concerns, and now is a good time to be selling gambling assets, Mr. Reeg said.
“There are smaller operators that want to be bigger,” Mr. Reeg said. “There’s operators that are not on the Vegas Strip that want to get on the Vegas Strip.”
Eldorado Resorts reported net revenue of $637 million for the three months ended June 30, down 6.2% from the year-earlier period. Net income was $18.9 million, or 24 cents a share, versus $36.8 million, or 47 cents a share, last year.
The company said its results were depressed by flooding in the Midwest, including near its casinos in Bettendorf, Iowa, and Cape Girardeau, Mo., and construction at its two casinos in Black Hawk, Colo., that took some hotel rooms and slot machines offline temporarily. Mr. Reeg said the quarter was frustrating but many of the problems are now behind the company.
Eldorado said it has identified $500 million in cost cuts in the first year after it completes the Caesars acquisition. Eldorado is assuming Caesars’s debt in the deal, and plans to pay off as much as $4.5 billion in the first two years, Mr. Reeg said. Caesars’ debt stood at $8.8 billion in June.
The outlook for Las Vegas is strong, he said, given Caesars’ high hotel occupancy and revenues, a busy group meeting calendar and an expansion of the city’s convention center.
“We feel very good about coming in this market at this moment,” Mr. Reeg said.
Eldorado shareholders will have 51% of the new company, and Caesars shareholders will have 49%.