Nevada-based gaming company Eldorado Resorts announced today a duo of acquisition deals that would expand its footprint across several new markets and would enlarge its portfolio of hotel and casino properties.
The operator said that it has entered into an agreement to buy Grand Victoria Casino in Elgin, Illinois from its current owners. The gaming property is 50% owned by Las Vegas giant MGM Resorts International. Hyatt subsidiary RBG, LLP also holds a 50% stake in the casino.
Eldorado Resorts will pay $327.5 million in cash. The company will use money from previous asset sales as well as from ongoing operations and borrowings under a revolving credit facility. The acquisition deal is expected to be closed in the fourth quarter of the year.
Eldorado Resorts will first need to secure regulatory approval and complete other closing conditions.
Grand Victoria Casino is located in Elgin, not far from Chicago along the Fox River. The casino property has 1,088 slot machines, 30 table games, and a poker room with 12 tables. It also features several dining facilities, meeting, banquet and event facilities, and a garage.
In a separate press release, the Reno, Nevada-based gaming and hospitality company announced that it would buy Tropicana Entertainment Inc., the owner of properties in six states and the Dutch Caribbean island of Aruba. The gaming and hospitality company is currently owned by New York hedge fund manager Carl Icahn. Eldorado Resorts is set to assume control over seven of Tropicana’s eight properties.
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The deal was valued at $1.85 billion. Under a definitive agreement, Gaming and Leisure Properties, which spun off from Penn National Gaming back in 2013 as the company’s real estate investment trust, will pay the amount of $1.21 billion for seven of Tropicana’s properties and will then enter into a master lease agreement with Eldorado Resorts to operate said properties. Eldorado Resorts will cover the remaining $640 million of cash consideration payable in the deal.
The master lease will have an initial term of 15 years and offer an opportunity for a 20-year renewal. Tropicana plans to dispose of its Aruba property – Tropicana Aruba Resort and Casino – before the closure of the deal. The acquisition is expected to be completed by the end of the year.
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The seven Tropicana hotel and casino properties to be acquired include Tropicana Casino and Resort in Atlantic City, Lumière Place in Missouri, and Tropicana Laughlin Hotel and Casino and the MontBleu Casino Resort & Spa in Nevada. These will add approximately 7,900 slot machines, 265 table games, 5,400 hotel rooms, and a number of food and beverage, retail, and entertainment facilities to Eldorado Resorts’ existing portfolio.
Consolidation Wave in the States
The two major acquisition deals come at the time of a larger consolidation wave within the US land-based casino industry. A number of major US-based gaming companies have undertaken merger and acquisition moves in recent years as they have been looking to expand their footprint across the nation, diversify their businesses beyond gambling, and capitalize on the legalization of gaming in several states.
Late last year, Penn National Gaming announced that it would buy fellow operator Pinnacle Entertainment for $2.8 billion. Las Vegas giant Caesars Entertainment Corp., too, boarded the consolidation train, announcing the $1.7 billion acquisition of Centaur Holdings in late 2017. The company’s main operating unit emerged from bankruptcy last fall.