Eldorado Resorts Puchases Carl Icahn’s Tropicana Casinos
Billionaire Carl Icahn recently announced that he has decided to sell casino operator Tropicana Entertainment for $1.85 billion. The buyers are Eldorado Resorts Inc. and Gaming and Leisure Properties Inc. who have teamed up to buy the casino operator. The acquisition will not include Tropicana's Aruba assets as these are set to be sold separately.
Gaming and Leisure will be providing the bulk of the purchase amount as they will be putting down $1.21 billion. This will pay for a majority of Tropicana's casinos. Eldorado will pay the remaining $640 million of the purchase price and then be given the option to lease and operate these casino properties. With this acquisition, Eldorado will gain a bigger piece of the gambling market.
Eldorado will be getting access to seven casinos across six states. Two of its new casinos will be in Nevada. This is the second deal in which Eldorado acquired new property in just 18 months. Eldorado had earlier purchased Isle of Capri Casinos Inc. in 2017 after paying out $1.1 billion.
Tropicana Atlantic City
Eldorado also agreed to buy the Grand Victoria Casino in Elgin, Illinois. They paid MGM Resorts International $327.5 million for the purchase. These purchases further diversify the company's portfolio. The company now owns 20 casinos in 10 states already but is still hoping to acquire more and expand its market share. This purchase has improved Eldorado's share price greatly. It jumped up by 21% to reach $43.15. This is the company's biggest rally since it first began trading back in September 2014.
In a statement, Gary Carano, Eldorado chairman and CEO, said
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 On A Selling Spree
This is Icahn's second sale in just two weeks. He previously sold his auto-parts maker Federal-Mogul LLC on April 10. The buyer, Tenneco Inc. reportedly paid $5.4 billion for the acquisition.
The Tropicana purchase is expected to be closed by the end of the year. This delay is mainly because it needs to get approved by Tropicana shareholders. The deal is very lucrative and will mean a big payday for the shareholders so it is highly likely that they should approve the same. If the shareholders decide to terminate the agreement or if Eldorado and Gaming and Leisure decide to back out, there will be a termination fee of $92.5 million.