Billionaire Tilman Fertitta to buy Caesars Entertainment in $17.6bn deal
All-cash takeover will be one of the biggest gaming deals in years
The hospitality billionaire Tilman Fertitta has agreed an all-cash takeover of Las Vegas casino operator Caesars Entertainment, marking one of the biggest gaming deals in years.
As part of the take-private deal, Fertitta Entertainment will pay $31 a share in cash to Caesars shareholders, valuing the group’s equity at $5.7bn. Including debt, the deal values Caesars at $17.6bn.
The deal marks the latest twist in the colourful history of one of the jewels of the Las Vegas Strip, which had emerged from a contentious bankruptcy process in 2017.
The FT first reported that Fertitta, who is at present the US ambassador to Italy, had made a bid for Caesars in February. The deal values Caesars’ stock at a 49 per cent premium to before the FT report.
The deal will unite the Caesars gambling empire, including the Eldorado casinos, its flagship operations in Las Vegas and its betting app, with Fertitta’s hospitality empire spanning 600 venues including Landry’s restaurant group and Golden Nugget casinos.
The Carano family, which took control of Caesars when the group was combined with Eldorado in 2020, will maintain a 5 per cent shareholding in the new company. Caesars’ management team, including chief executive Tom Reeg, will continue to run the business.
A group of 10 banks has backed a debt financing package to fund the deal. The deal also includes a “go-shop” period through to mid-July during which Caesars and its advisers can weigh offers from other potential buyers.
Fertitta has also agreed to compensate investors if the takeover is not wrapped up within the next 13 months. A “ticking fee” of almost 1 cent a share will be added to the $31 per share deal price for every day after June 26, 2027 that the transaction has not been closed. Gaming regulatory reviews, conducted individually by US states, can take several months to complete.
The transaction comes at a time when Caesars and Las Vegas have been struggling. Visitor numbers to Sin City moderated after a post-pandemic boom and Wall Street investors had worried about the impact of smartphone sports betting and prediction markets on traditional casino gaming.
The Fertitta deal, however, is a vote of confidence that both gambling and other forms of Las Vegas entertainment such as nightclubs, restaurants and spas will remain resilient.
The Carano family’s rollover equity is expected to allow Caesars to keep its existing debt in place allowing for significant savings in interest expense. Caesars also pays billions of dollars in rent to the property trust Vici, a landlord that was created from the 2017 restructuring transaction.
The new financing provided by the group of banks is less than $5bn, according to people familiar with the matter.
Fertitta, a Texas native, has been among the most prolific American dealmakers in hospitality as well as professional sports. Among his restaurant chains are Mastro’s Steakhouse, Del Frisco’s, Catch as well as Rainforest Cafe and Bubba Gump Shrimp Co. He also owns the National Basketball Association’s Houston Rockets.
PJT Partners and Latham & Watkins provided advice to Caesars on the deal. Freshfields served as counsel for the Carano family. Morgan Stanley and Goldman Sachs provided financial advice to Fertitta Entertainment while White & Case provided legal counsel.