Eldorado Resorts Inc., whose properties include the Eldorado Resort Casino in Shreveport, will acquire Isle of Capri Casinos Inc.in a cash or stock deal valued at $1.7 billion.
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The deal is expected to close in the second quarter of 2017.
Technology products distributor Tech Data jumped after it said it will buy the technology solutions business of Avnet for $2.6 billion in cash and stock.
In 2014, Eldorado merged with MTR Gaming Group.
In trading on Monday, healthcare shares rose by just 0.01 percent.
“The combined company will have 20 properties in 10 states and would have generated about .8 billion in revenue for the 12 months ended in June”, according to the Wall Street Journal. The big casino operators like Las Vegas Sands and Wynn Resorts don’t want to buy small venues because their focus is on large, showy resorts, and those in small cities won’t contribute much to their bottom line.
Gary Carano, Chairman and Chief Executive Officer of Eldorado, commented, “The acquisition of Isle of Capri represents a transformational growth opportunity for Eldorado and is a significant milestone in the successful ongoing execution of our long-term strategy to opportunistically expand our regional gaming platform through accretive acquisitions”.
Eldorado, which owns seven casinos across five USA states, was up 8.6 percent. Meanwhile the German DAX gained 0.95 percent, and the French CAC 40 climbed 1.43 percent while United Kingdom shares rose 1.54 percent. Notably, after giving effect to the transaction, the incurrence of debt to fund the cash portion of the purchase price, transaction expenses, and the expected first year cost synergies of $35 million, we expect our net leverage ratio to be approximately 5.1x at closing.
Shares in Isle of Capri were up 32% to US$22.28 in early deals, while shares in Eldorado were pretty flat at US$14.30.
While both company’s boards of directors have approved the deal, each company’s shareholders will also have to sign on for the deal to go ahead.
That is because Isle of Capri Casino and Eldorado Resorts have officially entered into a definitive merger agreement. Isle shareholders will own 38 percent of the combined entity and Isle will designate two new directors to sit on the company’s board, subject to agreement of both companies.
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As stocks looked exhausted ahead of this week’s central bank meetings, Infoblox Inc (NYSE:BLOX), Isle of Capri Casinos (NASDAQ:ISLE) and Sarepta Therapeutics Inc (NASDAQ:SRPT) provided plenty of excitement. There’s a lot of similarities between the two companies.
