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Caesars Provides Update on Eldorado Merger, Key Business Segments Finance Report
August 7, 2019 Andrej Vidovic
Gambling operator titan, Caesars Entertainment, has posted an update regarding its historic merger with Eldorado Resorts, as well as second quarter’s financial report.
In general, the company marks a good performance across two key business segments, with revenue climbing, but income suffering somewhat.
Board Shaping Up
The completed purchase of Caesars by Eldorado…
…was agreed unanimously by both parties’ board of directors. Eldorado and Caesars stockholders will hold circa 51% and 49% respectively of the company’s combined common stock shares.
Eleven directors (five will be selected by Eldorado executives from Caesars’ board of directors) will comprise the newly formed company’s board. The multi-billion deal is still a subject of approval of the stockholders and relevant gaming authorities. Estimates suggest that the finalization of the deal will happen sometime in the first half of 2020.
The State of Figures
During this year’s second quarter…
…Ceasars’ revenue climbed 4.9% to $2.22 billion from $2.11 billion. The catalyst for this was, chiefly, $82 million increase in revenues stemming from Centaur Holdings acquisition that was completed in July 2018.
The rise of competition in Southern Indiana, Atlantic City, Iowa led to a decrease in income which fell $29m to $323m on annual level. This major negative impact was down to a $323 million year-over-year change in the fair value of derivative liability “related to convertible senior notes maturing in 2024.”
In Las Vegas…
…net revenue rose $10 million, mostly owing to hotel, food and beverage segment performance boost. This helped offset the unfavorable hold at Caesars Palace and poor performance of table games (the only one that did well was baccarat).
The report also states that “across all casino properties, hold has a poor impact of $14m to $19m in comparison with the year before” ($1m – $4m below expectations). As a result, adjusted EBITDA rose 1.3% to $631m.
Poised to Succeed
Caesars’ CEO, Tony Rodio, gave a thorough comment on these results:
“Caesars delivered solid financial results in the second quarter driven by the contribution from Centaur and strength from our Las Vegas hotel and food and beverage businesses.
Our Las Vegas performance was the result of strong group and leisure demand, which produced an all-time quarterly record for hotel cash revenue and occupancy for the second consecutive quarter.
These results were partially offset by competitive pressures in Atlantic City and other parts of our regional portfolio as well as unfavourable hold predominately at Caesars Palace.”
He also added that, as the completion of a proposed merger with Eldorado Resorts is being worked on, he and his management team are remaining focused on improving operations and financial profile of the company “through incremental revenue opportunities and operating efficiencies.”
He concluded by saying: “I’m confident that the proposed transaction will create an industry leading platform poised to succeed in our dynamic industry.”
Source:
“Revenue up, income down as Caesars provides Eldorado merger update”, casinobeats.com, August 6, 2019.
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These two will probably start a trend of mega corporations in gambling with many more mergers to come. What this will do to smaller operators, nobody knows.