(Reuters) – US casino operators Eldorado Resorts Inc and Caesars Entertainment Corp are in the early stages of exploring a merger, people who know the issue said on Sunday.
FILE PHOTO: The sign on the Caesars Palace hotel is seen on the strip in Las Vegas, Nevada, USA on February 1
Business documents come after the emperors agreed this month to give billions of investors Carl Icahn, who has run the company to sell himself, has three board meetings for his representatives and a statement on the election of his next CEO.
Caesars provides some limited confidential financial information to Eldorado, which carefully cares about the potential combination of the two companies, the sources say.
Eldorado has not yet made a binding offer to Caesars, and there is no certainty that any bid will be materialized or that an agreement will be negotiated successfully, the sources are added and requested not to be identified because the issue is confidential.
Caesars and Eldorado have market values of $ 5.4 billion and $ 3.6 billion, respectively. They also owed $ 9.1 billion and $ 3.3 billion, respectively, at the end of December.
Caesars refused to comment, while Eldorado did not respond promptly to a request for comment.
The combination of Caesars and Eldorado would create a more formidable competitor for major casino players, such as Las Vegas Sands Corp., Wynn Resorts Ltd and MGM Resorts International.
"The buyer's universe (for Caesars) is limited, and Eldorado is best suited to extract full value from Caesar's assets in our view," wrote Roch Capital Partners analyst in a March 6 research report.
Caesars, whose casinos include the Harrah and Horseshoe brands, arose from bankruptcy protection in 2017 after failing to handle about $ 25 billion in debt. It had 53 properties in 14 US states and five non-US countries, including the UK, in late December.
Eldorado owns and operates 26 properties in 12 US states.
Last year, Caesars rejected a merger of Tilman Fertitta, the billionaire owner of Golden Nugget casinos. This agreement would essentially have been structured as an acquisition of emperors in view of its larger size. Fertitta has not made any new offer to Caesars this year, according to the sources.
Caesars has also said it is exploring strategic options that can lead to some form of transaction.
Icahn has steadily increased its share in Caesars while waiting for a deal. Last week, he revealed that his share had reached 17.8 percent, up from 9.8 percent when he made his agreement on-site with the company on March 1.
Reporting by Greg Roumeliotis in New York; Editing by Peter Cooney