No Gold Coast Casino For Caesars After Eldorado Deal
Caesars Entertainment Corporation has decided to shelve its proposed Queensland casino project. It made its decision after one of the largest deals in the gambling world was announced last week.
Eldorado Resorts will buy Caesars Entertainment Corporation in a massive $8.5 billion deal. Most of the properties affected by or included in the deal are located in the United States. However, there was one property in Australia that felt the aftereffects. Caesars will no longer pursue an integrated casino and resort property in Queensland.
Massive Merger
Eldorado and Caesars had been in discussions about a possible merger or acquisition since at least March. That’s when the deal was first announced. But last week, the deal became official.
The agreement is worth $8.5 billion in cash and stock. Eldorado shareholders are to take control of 51% of the combined shares at a price of $13.01 per share. That’s a premium of 51% over Caesar’s trading price on March 1. The deal will apparently close during the first half of 2020.
American investor Carl Icahn is behind the deal. The billionaire secured positions on the Caesars board of directors recently. He then secured the right to name the new CEO. Icahn subsequently appointed Anthony Rodio, former Tropicana CEO, to the top position at Caesars in April 2019. And Icahn had been suggesting a merger or acquisition for Caesars for quite some time.
Upon the announcement of the deal, Icahn hailed himself as an activist shareholder. He also held the deal up as a “quintessential example” of how one could work collaboratively with the board and enhance the value for all stockholders. Icahn said the board ultimately acted “responsibly and decisively in negotiating and approving this transformational transaction.”
Icahn further stated that the combined forces of Caesars and Eldorado into one will make it “America’s preeminent gaming company.”
Never Mind, Queensland
As soon as the deal became public, the Australian media confirmed that Caesars will no longer pursue the integrated casino/resort project in Queensland.
According to Queensland Tourism Department Director Damien Walke, Caesars no longer felt that the project was an “attractive opportunity”. Caesars reportedly informed the government of its decision and said it was a result of “internal company changes and not the attractiveness of the Gold Coast market as an investment opportunity.”
Eldorado CEO Tom Reeg would not confirm that the Gold Coast property deal was off the table. He did say, however, that any international opportunity for an investment would have to be “stupendous” for them to pursue it.
Will There Be a Second Queensland Casino?
That is the question at hand.
Some media outlets report that other casino operators have expressed an interest in the Gold Coast area for a new casino. But it remains unclear as to whether there is enough traffic and tourism to support a second establishment of that kind.
Of course, Star Entertainment Group is satisfied to remain the only operator in the area. The Star Gold Coast has been the primary opponent to another casino for obvious reasons. Star is afraid that the market would suffer from oversaturation if another casino/resort was approved.
Further, Star is in the process of upgrading The Star Gold Coast. The massive plan was approved in last 2018, receiving government support to enhance the Gold Coast area and inject more than $2 billion into the area’s economy.
Star Entertainment Group Managing Director and CEO Matt Bekier talked about the Gold Coast upgrade. The development includes four additional towers with more hotel rooms and apartments, more restaurant and bar space, and increased entertainment and retail options. He expressed hopes that the project as a whole would be comparable to Macau and Las Vegas resorts.
The Queensland government has yet to comment on any continued search for a second casino operator for the Gold Coast area since the Caesars news became public. However, based on the number of concerns raised by many residents and problem gambling groups, it is unlikely that the search will continue. Official word may come in the next few months.
