Eldorado Resorts, Inc. finalized the acquisition of Isle of Capri Casinos, Inc. on Monday, May 3rd, 2017. In the wake of the merger, shares of Eldorado Resorts (NASDAQ: ERI) have been on the rise since Monday. Isle of Capri Casinos and Eldorado Resorts produced a combined revenue of $1.7 billion during the 2016 calendar year.
The Isle of Capri represents the addition of twelve new resort-style casinos to the Eldorado company portfolio. Eldorado Resorts now controls 19 different property locations spanning ten states. When the merger process began in 2016, Eldorado was expected to acquire thirteen new casino-resort properties from the Isle of Capri. During the acquisition process, Isle’s Lady Luck Casino was sold for $40 million. The Lady Luck, located in Iowa, was therefore not part of the finalized merger deal.
The merger forces Eldorado to deal with Isle of Capri’s longstanding debt of $929 million. The sale of Isle’s Lake Charles, Louisiana property is expected to bring in $134 million when it finalizes in the second quarter of 2017. This money will be used to reduce Isle’s long-term debt.
Don Carano founded Eldorado (then called Eldorado Holdco, LLC) as a family company. Today, his son Gary remains in charge of the business. Gary Carano, Chief Executive Officer and Chairman of Eldorado Resorts, is optimistic about the new Isle merger and the future of Eldorado. Gary says that the merger represents a major leap forward in the expansion of the company name. Eldorado now retains control of 20,000 video lottery terminals and slots, over 550 gaming tables, and more than 6,500 individual hotel rooms across the country.
Reports from the week prior to the merger suggested that the clear majority of Isle shareholders favored the merger. Isle shareholders were offered either $23 per share of Isle common stock, or 1.638 Eldorado shares for each share of Isle stock. More than 35 million Isle shareholders chose to receive 1.638 shares of Eldorado stock per share of Isle common stock, and nearly seven million Isle shareholders chose the cash option at $23 per Isle share.
The previous figures overwhelmingly demonstrate that Isle of Capri shareholders are willing to stay invested past the merger. Eighty-five percent of Isle shareholders chose to transfer their investment from Isle to Eldorado common stock.
This is not the first major acquisition for the Reno-based Eldorado Resorts. Back in 2014, Eldorado merged with MTR Gaming Group. That merger brought three racinos under Eldorado control. One of those racinos, Scioto Downs in Columbus, Ohio, was in financial crisis prior to the MTR merger. Eldorado brought Scioto Downs back to profitability, and the number of races and purses offered has also been increased. Current investors are hoping for Eldorado to transform Ithe Isle of Capri in a similarly successful fashion.