Date: November 2018
Location: mainly USA, mainly Las Vegas
What: MGM has hired investment bank Morgan Stanley as well as the law firm Weil, Gotshal & Manges, to study the potential for a merger with Caesars Entertainment, a gaming source told the New York Post on Monday.
No offers have been made, according to The Post story, but activist hedge funds, which own about 25% of under-performing Caesars, have been pushing for an MGM deal, sources said.
The funds were seen as behind last week’s resignation of Caesars CEO Mark Frissora.
MGM’s enterprise value, equity plus debt, is $30 billion, and Caesars’ chips stand at $22 billion.
Caesars recently rejected a takeover offer from Tilman Fertitta’s much smaller Golden Nugget casino chain.
That scenario is seen as playbook perfect for the activist hedgies, with larger MGM playing a white knight role, sources said.
MGM may not be the only game in town, though, for Caesars.
Wynn Resorts, at $18 billion enterprise value, may sidle up to the table if it gets to keep its license to build a Boston-area casino, sources said.
Malaysia’s Genting Group, which owns Resorts World at Aqueduct Racetrack, could also be in the mix, as well as private equity firms that have a license to operate casinos, like The Blackstone Group, sources said.
Caesars also is in negotiations to buy some of Jack Entertainment’s Ohio casinos, but tax implications may undo that effort, a source said.
If combined, MGM and Caesars would own about half the hotel rooms in Las Vegas and Atlantic City, which could trigger regulatory
THPT Comment: Speculation at this stage…MGM and Caesars declined to comment, and Canyon Partners (one of the above-mentioned hedge funds) declined comment beyond saying it had not signed a confidentiality agreement with MGM.
First Seen: Hotels Magazine