Fertitta Set To Take Over Caesars Business Struggling On Strip, Thriving Elsewhere

Tilman Fertitta looks to be buying a Caesars business that is struggling in Las Vegas — but performing well everywhere else — if his takeover proposal ultimately goes through.

Caesars released its second-quarter results after the market closed Tuesday. It was the casino giant’s first results announcement since its board agreed to a deal to be acquired by Golden Nugget parent company Fertitta Entertainment in May for a $17.6 billion total value, including assumption of debt. Fertitta Entertainment is working on getting all the necessary licensing approvals for the deal, after which Caesars shareholders will vote on its approval.

Regional revenue up, Strip down

Caesars’ revenue overall edged up by 3% to $2.99 billion. That growth was mostly driven by its regional casinos business. In Las Vegas, revenue was down by 3.5% to $1.01 billion.

“Regionals were a bright spot while the Strip was soft,” Truist analyst Barry Jonas wrote in a note to clients.

Caesars said “lower city-wide leisure customer visitation” contributed to the Las Vegas decline, but Jonas said that his team believes the decline for Caesars in Las Vegas is more due to a dip in market share than a fundamental decline in revenue from the city as a whole.

Revenue from Caesars’ digital arm grew slightly despite customer-friendly results reducing sportsbook revenue.

The company took a $62 million net loss, as corporate costs rose.

Deal may not close soon

Jonas said that he did not expect the acquisition to close anytime soon.

“While the go shop period looks to have passed, we think a Fertitta transaction close is likely still some time away,” Jonas wrote.

A key part of the deal will be Fertitta’s assumption of Caesars’ debts. Of the $17.6 billion total value of the deal, only $5.7 billion is paid in cash, with the remainder being the value of taking on the debt. Caesars cut its debt pile by $100 million to $11.8 billion in the quarter.

Due to the takeover agreement, Caesars did not host an earnings call or provide any commentary from its senior executives on the results.

Caesars shares dipped slightly in early trading Wednesday, by as much as 0.8% to $29.70, but the expectation of a takeover ensured they wouldn’t dip too low. The shares are still about 4% below the $31-a-share value of Fertitta’s offer, suggesting that while a deal is likely, it’s not a guarantee.