Casino M&A continues with Eldorado’s Tropicana buy

Monday 16th of April 2018

The recent flurry of consolidation in the U.S. casino industry is continuing with Eldorado Resorts agreeing to buy Tropicana Entertainment for about $1.85 billion in cash.

Under the accord, the definitive agreement provides that Gaming and Leisure Properties will pay $1.21 billion, excluding taxes and expenses, for substantially all of Tropicana’s real estate and enter into a master lease with Eldorado for the acquired real estate and that Eldorado will fund the remaining $640 million of cash consideration payable in the acquisition.

Eldorado said in a filing that the transaction is expected to be immediately accretive to free cash flow and diluted earnings per share, inclusive of expected cost synergies of approximately $40 million in the first year.

Las Vegas-based Tropicana owns and operates eight casinos and resorts in Indiana, Louisiana, Mississippi, Nevada, Missouri, New Jersey and Aruba. Tropicana properties collectively have approximately 5,526 hotel rooms, 8,075 slot positions and 277 table games. Eldorado Resorts is a casino entertainment company that owns and operates twenty properties in ten states.

On Monday, Eldorado said it would buy the Grand Victoria Casino in Elgin, Illinois from MGM Resorts in a separate deal worth $327.5 million.

Shares in Eldorado popped more than 16 percent after news of the acquisitions and Union Gaming analyst John DeCree noted there is potential for more upside.

There has been a recent acceleration in the reshuffling of casino assets in the U.S., with reports Wynn Resorts may sell its Wynn Boston Harbour property and Caesars Entertainment inked a deal for a Harrah’s property in Northern California.

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