Caesars Entertainment approached about merger with Golden Nugget
Shares in group jump as billionaire Tilman Fertitta makes cash-and-stock offer
Tilman Fertitta, the billionaire owner of the Houston Rockets basketball team, has approached Caesars Entertainment about a possible combination of his Golden Nugget Casinos chain with the Las Vegas owner of Caesars Palace.
Mr Fertitta had approached Caesars in recent days, two people familiar with the situation said, although they cautioned that a deal was not certain to be agreed.
One said Mr Fertitta made a $13 per share cash-and-stock offer but that he did not extend it to Caesars’ former private equity owners, Apollo Global Management and TPG Capital. The firms remain among Caesars’ largest shareholders after its emergence from bankruptcy a year ago and could present a significant hurdle for Mr Fertitta to overcome.
Shares in Caesars were up almost 11 per cent at $10.12 in afternoon trading after Reuters and CNBC first reported the approach, giving it an equity value valuing its equity at $7bn.
The stock remains below its February high of more than $14, however, after Caesars shocked investors this summer by saying that it had seen pressure on room rates in Las Vegas.
Mr Fertitta, who also controls the Landry’s restaurant chain, bought the Houston Rockets last year for $2.2bn, an NBA record. This year he spent $308m on a Louisiana food delivery start-up called Waitr and opened the Post Oak Hotel in Houston.
With a fortune estimated by Forbes at $4.5bn, he hosts a CNBC show called Billion Dollar Buyer, bought his first private plane at 35 and owns a $40m, 164-foot superyacht.
Mr Fertitta’s pursuit of Caesars comes as Mark Frissora, Caesars’ chief executive, has been investing in renovating its hotel rooms, revitalising its loyalty programme and expanding its hospitality business.
Mr Frissora has also voiced hopes for growth in sports betting revenues after the US Supreme Court struck down a federal law that had banned betting on matches in all but a few states.
In a recent CNBC interview, Mr Fertitta said the “world of gambling on sports is going to totally change in the next five years”. Nevertheless, he pointed to pressure in Atlantic City, one of the largest US casino hubs, where, he said, “there is not enough room for this many casinos”.
Analysts have been forecasting consolidation among US casino owners. Penn National Gaming this week completed its $2.8bn purchase of rival Pinnacle Entertainment, and industry observers are expecting more deals.