Eldorado Resorts enters into definitive agreement to acquire Isle of Capri Casinos for $23 per share in a cash and stock transaction valued at $1.7bn.
[dropcap]E[/dropcap]ldorado Resorts and Isle of Capri Casinos announced yesterday (Monday) that they have entered into a definitive merger agreement whereby Eldorado will acquire all of the outstanding shares of Isle of Capri for $23 in cash, reflecting total consideration of approximately $1.7bn. This is inclusive of $929m of long-term debt of Isle of Capri and its subsidiaries.
Following the completion of the transaction, Eldorado will benefit from increased operational and geographic diversity as it will add thirteen casino-resorts to its portfolio, for a total of 20 properties in ten states. After giving effect to the completion of the transaction and the sale of Isle of Capri Casino Hotel Lake Charles, the combined operations of Eldorado and Isle would have generated approximately $1.8bn in revenue for the twelve months ended 30 June, 2016. Eldorado’s expanded property portfolio will now feature approximately 20,800 slot machines and VLTs, more than 560 table games and over 6,500 hotel rooms.
“The acquisition of Isle of Capri represents a transformational growth opportunity for Eldorado and is a significant milestone in the successful ongoing execution of our long-term strategy to opportunistically expand our regional gaming platform through accretive acquisitions,” Gary Carano, chairman and CEO of Eldorado, commented.
“In the last two years we have created tremendous value for our shareholders as the scale of Eldorado Resorts will grow from two wholly-owned properties and a 50 percent interest in a third property in two markets in 2014 to 20 properties in ten states after completing the transaction. Financially, the transaction is expected to be accretive to our operating results upon closing. For the twelve month periods ended the last day of the most recent fiscal quarter for each of Eldorado and Isle, the revenues of the combined company were almost double Eldorado’s revenues on a standalone basis and was approximately $400m, inclusive of the cost synergies we have identified.
The acquisition of Isle of Capri represents a transformational growth opportunity for Eldorado and is a significant milestone in the successful ongoing execution of our long-term strategy to opportunistically expand our regional gaming platform through accretive acquisitions
“Led by our proven gaming,” he went on, “hotel management and food and beverage teams with a long-term record of operating execution and M&A integration we believe that Eldorado Resorts will be positioned for long-term success. Combining the assets, management, personnel, operations and other resources of these two organizations is expected to create substantial near- and long-term synergies.”
Eric Hausler, chief executive officer of Isle of Capri, who was also pleased, added, “We are pleased to reach this agreement with Eldorado Resorts, which provides Isle of Capri shareholders with substantial and immediate value, as well as the opportunity to participate in the upside potential of the combined company. The premium value our shareholders will be receiving reflects the culmination of several years of hard work by many dedicated Isle of Capri employees and the determination and guidance of our Board of Directors in creating and driving value. I am thankful for the hard work and dedication of our talented employees, and I am confident they will continue to make many valuable contributions as part of a larger and stronger organization. I look forward to working closely with the Eldorado team to bring our companies together to realize the benefits of this compelling combination and ensure a smooth transition.”
Eldorado has received committed financing for the transaction totaling $2.1bn from JP Morgan. The completion of the transaction is not subject to a financing contingency.
Credit Suisse is acting as exclusive financial advisor and Mayer Brown LLP is acting as legal counsel to Isle of Capri in connection with the proposed transaction.