🍒 New Jersey Regulators Won't Discuss Eldorado Caesars Deal in June

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Eldorado will pay $ billion in cash and 77 million shares of stock to acquire 51 percent of the company, as well as taking on Caesars' existing debt. Once.


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Eldorado will pay $ billion in cash and 77 million shares of stock to acquire 51 percent of the company, as well as taking on Caesars' existing debt. Once.


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New Jersey regulators won't be taking up Eldorao's acquisition of of Eldorado Resorts' (NASDAQ:ERI) $ billion takeover of Caesars.


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Eldorado Resorts' planned purchase of Caesars Entertainment may hit some speed bumps -- or a wall. Travis Hoium. (TMFFlushDraw). Apr


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Eldorado Resorts and Caesars Entertainment have sold three casinos at a discounted rate as the two companies seek approval from state and.


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To acquire the venerable Caesars name and properties, Eldorado will part with $ billion in cash and around 77 million stock shares.


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The acquisition of Caesars Palace by Eldorado Resorts will create the largest casino owner/operator in the U.S. while also providing a case.


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Eldorado Resorts' planned purchase of Caesars Entertainment may hit some speed bumps -- or a wall. Travis Hoium. (TMFFlushDraw). Apr


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Indiana Regulators Will Talk Eldorado/Caesars Deal at July Meetings external analyst's report on Eldorado's planned acquisition of Caesars.


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Eldorado Resorts and Caesars Entertainment have sold three casinos at a discounted rate as the two companies seek approval from state and.


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eldorado caesars acquisition

Extreme increases in ERI's daily trading volume could indicate trading is based on market mechanics rather than fundamentals. Dollar figures in millions. Both companies already have negative tangible book values due to goodwill and other intangibles from acquisitions in previous years. Data compiled from ERI's recent bond and mortgage issuance. Eldorado's first quarter earning was relatively much better than many of its hotel and gaming peers. However, in the current COVID pandemic global economy, this acquisition substantially increases the risk profile for Eldorado's shareholders. Unlike regional markets, Las Vegas relies on out of state and international tourists for a meaningful portion of its revenues. Since average daily volume exploded since late February and remained at highly elevated levels, ERI could be subject to market mechanics rather than actual fundamental news. Similar to peers in its industry, Eldorado is highly leveraged to its revenues with little margin for error. This will mean a higher level of losses and cash drain until the pandemic is over. Despite a potential fundamental blowup for bulls, ERI bears should equally heed caution because the stock could react irrationally and disproportionately to any perceived good news. There is a slight short term negative with its daily MACD crossing over to the bearish side but with the stock straddling its day moving average recently, the MACD could quickly reverse to a bullish crossover on any perceived positive news. Still, the initial reopening surge could simply be due to pent-up demand from people tired of being stuck at home. The bottom indicator shows the daily MACD. Beyond a very stretched balance sheet, the near term earnings profile for both companies could be very weak. Dollar figures in billions. While the stock could continue to trend higher under this mechanical circumstance, risk adverse investors may want to take advantage of ERI's recent strength to diversify into companies with greater business certainty and stronger balance sheets. As long as COVID is still spreading throughout the US, it is likely first-quarter results will represent the best quarter of this year. Operationally and excluding impairment of intangibles, Caesar's operating margin was taken down to break even on just a Obviously, since financial results for both companies are currently impacted by COVID, we cannot use their operating results this year in evaluating the combined company's potential normalized financials. Chart source: Yahoo Finance. Since treasury rates are so low, the higher cash balance would not be doing much except for being a stopgap buffer until revenues return to pre-COVID levels. The current state of the stock market has been confounding many veteran observers. The following table lists vital performance metrics for each company and for the combined company after merger-related adjustments based on fiscal reported results. Perhaps the only saving grace amid an indefinite period of horrible earnings is the current high liquidity state of the stock market. While Eldorado's regional businesses may be more insulated from travel restrictions, its proposed merger with Caesars Entertainment CZR could prove disastrous if the current COVID pandemic lingers beyond this year. Although the financial situation reviewed above does not look promising, ERI's technical picture is far from bearish. Due to its regional diversification in the US, revenues only dropped by Although the company's statement citing a 6. Extreme market liquidity as a result of a very loose Federal Reserve has created short term imbalances and resulted in a disconnect between stock movement and economic fundamentals. On an adjusted on-going basis, the In contrast, its acquisition target Caesars Entertainment posted a At least based on top-line performance, Caesar's properties were outperforming those of Eldorado. I wrote this article myself, and it expresses my own opinions. Similar to peers in the travel and leisure industry, Eldorado has experienced revenue contraction due to nationwide shutdowns. After seeing people flock to beaches after initial reopening, many Americans do not seem to be too concerned with COVID, and all social distancing guidelines were simply ignored. Daily chart for ERI with and day moving averages shown in green and red, respectively. That's good news. Since the start of the February sell-off, ERI has average 10x more daily volume than its average last year. I have no business relationship with any company whose stock is mentioned in this article. Similar to Eldorado, Caesars has very little margin for error. Fiscal results should, therefore, represent the best-case performance metrics after all negative effects of COVID are behind us. This restriction should make it difficult, if not impossible, for operators to maintain the same level of revenues over the course of an entire quarter. Considering international travel was essentially cut off for over half the quarter, its Las Vegas resorts performed extremely well. From a balance sheet perspective, it doesn't get much prettier. With domestic travel down and international travel restricted, Las Vegas revenues would unlikely return to normal even if no capacity or social distancing guidelines existed. Adjusted figures exclude non-operating costs such as merger related impairment charges. I am not receiving compensation for it other than from Seeking Alpha. Earnings Comparison Eldorado Resorts Eldorado's first quarter earning was relatively much better than many of its hotel and gaming peers.{/INSERTKEYS}{/PARAGRAPH} In my opinion, the extreme daily volume in ERI suggests the stock is under some form of algo-trading which could be completely ignoring fundamentals or valuations. Using metrics from the table above, the only positive would be a positive free cash flow position after adding half a billion in post-merger synergies. This out-performance is further magnified since Las Vegas enjoys much higher levels of international tourism than regional casinos. Based on results, it is difficult to see any adjusted operational benefits from the Caesars acquisition. With the balance sheet already extremely stretched, a prolonged COVID economic environment could break the initial financial thesis for the merger. This is not normal, and the last time I witnessed this kind of insanity was two decades ago during the dotcom bubble. {PARAGRAPH}{INSERTKEYS}Unknown COVID duration would further weaken Eldorado's post-merger balance sheet since its business is highly leveraged and vulnerable to even minor revenue declines. In addition, operators will likely incur higher COVID operating costs to protect both its staff and customers. ERI's elevated levels may not be long term sustainable in this case.