Reports: Potential Merger on Tap for Caesars

Golden Nugget Las Vegas
The famous "shark tank" pool at the Golden Nugget Las Vegas.

A potentially big development on the horizon for Las Vegas hotels: the billionaire owner of Golden Nugget Casinos has approached Caesars Entertainment Corp about a merger, although a deal is by no means certain.

As first reported by Reuters, Tilman Fertitta has approached Caesars regarding a potential merger, although sources familiar with the deal said it is not certain. Caesars, which emerged from bankruptcy last year, is currently exploring a bid for another casino company, Jack Entertainment LLC.

According to the New York Post, Fertitta proposed a deal that would value Caesars, which is publicly traded, at $13 per share. While the “reverse merger” would technically mean that Caesars was acquiring Golden Nugget, the deal would still leave Fertitta as the combined company’s largest shareholder, making him chairman and chief executive. At the same time, Caesars, which has a market cap of $6.8 billion, could refuse to entertain an offer from Fertitta, whose net worth has been estimated at $4.5 billion.

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Chad Beynon, senior analyst at Macquarie, told CNBC that valuations in the gaming industry are “near five-year lows,” which could be driving more companies in the space to explore mergers. While Golden Nugget is a much smaller brand than Caesars, Beynon said Golden Nugget could still provide value to the company, because it is part of the Landry’s restaurant and entertainment conglomerate, which also operates the Morton’s steakhouse, Bubba Gump Shrimp and Rainforest Café brands.

A potential deal would also add the Golden Nugget Las Vegas to Caesars’ already-formidable hotel portfolio in the destination. In addition to Caesar’s Palace, the company also operates a Nobu Hotel, Planet Hollywood, The LINQ and more.

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