MGM Resorts and Caesars Entertainment Considering a Merger

MGM Resorts Caesars Entertainment Merger

Caesars Palace and Bellagio might be owned by the same company soon.

MGM Resorts International and Caesars Entertainment are considering a merger, according to the New York Post. If the two Nevada casino giant merge assets, they would own 52% of the properties on the Las Vegas Strip.

The NY Post reported that MGM brought on the Morgan Stanley investment bank and the Weil, Gotshal, & Manges law firm to consider the idea of a merger.

Those familiar with the deliberations point out that no offer has been made by either side.

The same sources suggested that the Canyon Partners hedge fund has a large stake in both companies and Canyon is pushing for the merger. Since this is the second time in a month that Caesars has been linked to a merger or buyout, the top owner of casino properties in the US appears to be the source of tremendous behind-the-scenes acquisition talk.

Given the fact the CEO announced his resignation recently, Caesars Entertainment appears to be headed towards some kind of major transition. Recent performance fuels that speculation.

Caesars Entertainment’s Recent Troubles

Caesars Entertainment stock is down 25% over the past year. A year ago, Caesers emerged from the long and bitter CEOC bankruptcy and company reorganization. Investors were bullish on Caesars stock, as the company was emerging from a period of consolidation and appeared ready to enter a new era of growth.

Since then, softness in the American casino economy led to a major selloff at a time that the stock market is soaring. The result is a series of rumors that Caesars might merge with other companies, including MGM Resorts and Golden Nugget.

The same trends already caused a shakeup in the board room. Caesars CEO Mark Frissora announced he would be stepping down last week.

Caesars Entertainment Properties

A merger between MGM Resorts and Caesars Entertainment would be huge news in the US casino industry. Caesars owns 49 casino properties, most of which in the United States. The list includes Caesars Palace, as well as several casino brands like Harrah’s, Bally’s, and Horseshoe.

Outside the United States, Caesars has properties in Canada, the United Kingdom, South Africa, and Egypt. Caesars also has expended into the non-gaming hotel and resort industry with plans for two resorts in the United Arab Emirates.

MGM Resorts Properties

MGM Resorts owns 19 casino properties, along with golf courses, sports arenas (42.5% of T-Mobile Arena), and a small air fleet. MGM owns 8 Las Vegas properties: MGM Grand, Bellagio, Mandalay Bay, Circus Circus, New York-New York, Luxor, Excalibur, and The Mirage.

Outside Nevada, MGM Resorts owns famous properties like Borgata in Atlantic City, MGM National Harbor on the border between Maryland and Washington DC, and MGM Springfield in Massachusetts. In Mississippi, the company owns Beau Rivage in Biloxi and Gold Strike Casino Resort in Tunica.

In Macau, MGM owns the lucrative MGM Macau and MGM Cotai. Besides the T-Mobile Arena, MGM Resorts owns the CityCenter in partnership with Dubai World and the Las Vegas Festival Grounds. It sponsors the WNBA team, the Las Vegas Aces, and has a data sharing deal with the NBA proper.

MGM and Caesars Sports Betting

Both companies have made strategic partnerships involving the expansion of sports betting in the United States. MGM Resorts signed deals with GVC Holdings and the aforementioned NBA partnership.

Meanwhile, Caesars signed deals that should allow it to offer sports betting products to smaller casino operators in over a dozen US states. Caesars also has been aggressive in partnering with US sports franchises, including the Baltimore Ravens and (soon to be) Las Vegas Raiders.

MGM and Caesars Japanese Casino Ambitions

The companies each have explored applying for a Japanese casino license. Japan is the world’s 3rd-leading economy and is expected to be the 3rd-largest casino industry. Receiving a casino license for Tokyo, Yokohama, Chiba, or Osaka would be a huge boon to either company – and a merged corporate entity might be better-placed to win such a license.

Caesars/Golden Nugget Merger?

Only weeks ago, reports surfaced the Golden Nugget‘s Tilman Fertitta had made a merger offer to Caesars Entertainment. The deal would have had Caesars buy out Golden Nugget and Fertitta owning a significant number of shares of Caesars Entertainment.

Caesars ultimately declined the offer, but the interest of the Houston Rockets’ billionaire owner was further sign that Caesars might look at a buyout or merger to increase the value of its stock to investors.