Caesars Entertainment Corp (CZR)

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Et tu, Brute?

(always sell a Faber report)

Caesars to reject merger offer from Golden Nugget
https://nypost.com/2018/10/21/caesars-to-reject-merger-offer-from-golden-nugget/

Caesars isn’t interested in any of Tillman Fertitta’s Golden Nuggets.

Fertitta — the billionaire owner of the Houston Rockets — invited Caesars Entertainment earlier this month to merge with his own gaming empire, which includes the Golden Nugget casino chain.

But Caesars’ board — which includes reps from billionaire Leon Black’s Apollo Management and David Bonderman’s TPG — is expected to unanimously reject Fertitta’s deal as soon as this week, believing it would saddle the casino giant with too much debt, two sources close to the situation told The Post.

News of Fertitta’s overture last week sent Caesar’s shares soaring 18 percent over two days, leaving them to close at $10.20 on Friday, giving Caesar’s a market cap of $6.8 billion.

That looks like a big bite for the Texas tycoon, whose net worth is estimated at just $4.5 billion. Caesar’s still has $9 billion in debt after emerging from bankruptcy a year ago, and Fertitta’s deal would add to that load, sources said.

“That is certainly not attractive,” a source with knowledge of Caesars’ thinking said, noting that it was a $25 billion debt load from a 2008 leveraged buyout that had plunged Caesars into bankruptcy in 2015.

Instead, Caesars — which also owns the Harrah’s and Bally’s casinos, as well as the Planet Hollywood chain — is in advanced talks to buy a few properties from Jacks Entertainment, a Midwest-based gaming concern that owns six casinos in Cleveland, Cincinnati and Detroit.

Indeed, some sources close to Caesars believe that word of Fertitta’s offer got leaked by hedge funds like Canyon Partners, which owns a 10-percent Caesar’s stake, and HG Vora Capital, which The Post first reported last month had built a 4.9 percent stake in Caesars.

Impatient with Caesars’ sagging stock, the hedgies are looking to derail the discussions with Jacks, even as they look to prod Caesars into a deal to buy Fertitta’s gaming company in a reverse merger, according to sources.

“I think some people are hoping this puts Jacks on hold,” one source close to the talks confirmed.

Nevertheless, the Caesars board, which includes partners from Apollo and TPG, is “united” about completing the Jacks deal, which could be valued at more than $1 billion, according to the source.

Under the deal, Caesars would buy the casino operations, while Caesar’s separately traded real estate arm, Vici Properties, would buy the land under them and lease it back to them in a long-term deal, a source close to those talks said.

Insiders likewise noted that a Jacks deal could make a case for the continued leadership of Caesars Chief Executive Mark Frissora, whose contract comes up in February.
Caesars declined to comment. Jacks did not return calls.