Eldorado Resorts Buys Tropicana Entertainment for $1.85 Bn

Eldorado Casino ResortRecently the multi-billionaire Carl Icahn has decided to sell his casino operator Tropicana Entertainment for a whopping sum of $1.85 billion.

Both Eldorado Resorts Inc and Gaming & Leisure Properties Inc will purchase the casino together. Tropicana’s Aruba assets are not available in this acquisition. These assets will be available for sale separately.

It is interesting to note that Gaming and Leisure would do the bulk of the purchasing as they would be putting $1.21 billion.

Eldorado Resorts will pay the remaining $640 million, and the company would have the option to lease and operate the casino properties. With the help of this acquisition, Eldorado would be able to earn a more significant share in the gambling market.

Eldorado Resorts would have access to 7 different casinos across six states. Two newly built casinos would be available for the residents of Nevada. It is interesting to note this is the second time Eldorado has purchased a new property in just a time span of 18 months. Back in 2017, it had acquired Isle of Capri Casino Inc for an amount of $1.1 billion.

Tropicana Atlantic City

Eldorado Resorts has also agreed to purchase Grand Victoria Casino situated at Elgin in Illinois by paying a whopping sum of $327.5 million to MGM Resorts International. All these acquisitions are going to diversify the portfolio of the company to a great extent.

At the moment, Eldorado Resorts owns 20 casinos in 10 different states and is looking forward to more acquisitions shortly. The recent purchasing has a positive impact on the overall share prices. The price of the share has registered 21% hike to reach $43.15. It is the biggest rally of the company ever since September 2014.

Gary Carano who is the CEO and Chairman of Eldorado made the following statement:

The acquisition of seven Tropicana Entertainment properties will allow Eldorado to enter two new gaming jurisdictions and deliver additional financial and geographic diversity to our operating base.

Icahn seems to be on a selling spree as he has registered two sales in just 14 days. Previously, he had sold his auto parts maker Federal-Mogul LIC on April 10, 2018, to Tenneco Inc for $5.4 billion.

It is hopeful that the end of 2018 would complete the Tropicana Casino sale. The main reason for the delay is approval requirement from the shareholders of the company. The deal is very profitable, and the shareholders would get a significant amount in return.

Hence, there is no reason as to why the shareholders would not approve the sale. If the shareholders want to terminate the deal or if Gaming and Leisure and Eldorado decides to have a change of heart, then they would have to bear a termination fine worth $92.5 million.

Jay Stevens

Jay Stevens

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