Caesars Entertainment shareholders have approved the company's $17.6 billion merger with Fertitta Entertainment, a significant step forward for this complex transaction. This decision came during a special meeting held on Tuesday at the Eldorado Resort and Casino in Reno, Nevada, where approximately 65% of eligible shareholders voted in favor of the deal announced in May. The agreement follows a bidding war between Fertitta and Carl Icahn, who previously held a controlling stake in Caesars and facilitated its sale to Eldorado Resorts in 2020.
In conjunction with the Fertitta merger, the Carano family, which currently has a stake in Eldorado, will keep their equity, and the company’s existing management will remain in place. However, Caesars also recently disclosed in an SEC filing that it received a demand letter from a shareholder on September 15, requesting to inspect certain company records. The shareholder alleged that the company did not adequately disclose details regarding its legal representation in the merger. Caesars dismissed these claims, labeling them as "without merit" and "immaterial." To avoid delays, the company provided additional information about its legal counsel, Latham & Watkins LLP, which has represented both Caesars and Fertitta for unrelated matters. It also clarified that Fertitta’s fees to Latham are significantly less than those associated with the merger.
Despite the shareholder approval, there are still critical hurdles to overcome before finalizing the deal. One primary requirement is antitrust clearance from the Federal Trade Commission (FTC). An initial Hart-Scott-Rodino antitrust filing for the merger was submitted in July. On September 14, the FTC requested further information from both parties, extending the review period by 30 days once they have "substantially complied" with the request; the nature of the information was not disclosed in Caesars' SEC filing.
The merger could necessitate divestitures due to market overlaps between Caesars and Fertitta’s Golden Nugget brand. Both companies compete in six US markets, including Las Vegas, Lake Tahoe, and Laughlin. The FTC previously mandated Eldorado to divest casinos in Lake Tahoe, Bossier City, and Kansas City when it approved the Caesars-Eldorado transaction.
Additionally, Fertitta must explore financing strategies for the $6.6 billion financing package associated with the merger. According to an SEC proxy filing, the project is supported by a senior secured credit facility, which includes a $2 billion revolving credit facility and $4.6 billion in term and bridge loans. The company informed Nevada regulators in July that it was waiting for favorable conditions in the money market to raise necessary funds, which has yet to materialize as the Federal Reserve has recently raised interest rates for the first time in three years, anticipating further hikes.
As of Wednesday, Caesars shares closed at $29.61, representing a slight drop of 0.03%. The price agreed upon in Fertitta’s bid was $31 per share, a 49% premium compared to Caesars’ closing price back in February when the offer was made.
