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US – Eldorado Resorts to buy Isle of Capri Casinos for $1.7bn

By - 19 September 2016

In a huge deal for the North American locals casino market, Eldorado Resorts is to buy Isle of Capri Casinos for $1.7bn.

The deal will add 13 casino–resorts to Eldorado’s portfolio, for a total of 20 properties in 10 states. After completion of the transaction and the sale of Isle of Capri Casino Hotel Lake Charles, the combined operations of Eldorado and Isle would have generated approximately $1.8bn in revenue for the 12 months ended June 30, 2016. Eldorado’s expanded property portfolio will feature approximately 20,800 slot machines and VLTs, more than 560 table games and over 6,500 hotel rooms.

Gary Carano, Chairman and Chief Executive Officer of Eldorado, said: “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. In the last two years we have created tremendous value for our shareholders as the scale of Eldorado Resorts will grow from two wholly-owned properties and a 50 per cent interest in a third property in two markets in 2014 to 20 properties in ten states after completing the transaction.

“Financially, the transaction is expected to be accretive to our operating results upon closing. For the 12month periods ended the last day of the most recent fiscal quarter for each of Eldorado and Isle, the revenues of the combined company were almost double Eldorado’s revenues on a standalone basis and combined Adjusted EBITDA was approximately$400m, inclusive of the cost synergies we have identified. Strategically, the combination builds the scale of our gaming operations and further diversifies the geographic reach of our operations without any overlap with our existing properties.

“We intend to implement our strategy of focusing on margin enhancement and customer service and experiences across the portfolio by marrying best practices from both companies. Led by our proven gaming, hotel management and food and beverage teams with a long-term record of operating execution and M&A integration we believe that Eldorado Resorts will be positioned for long-term success. Combining the assets, management, personnel, operations and other resources of these two organisations is expected to create substantial near- and long-term synergies.”

Eric Hausler, Chief Executive Officer of Isle of Capri, added: “We are pleased to reach this agreement with Eldorado Resorts, which provides Isle of Capri shareholders with substantial and immediate value, as well as the opportunity to participate in the upside potential of the combined company. The premium value our shareholders will be receiving reflects the culmination of several years of hard work by many dedicated Isle of Capri employees and the determination and guidance of our Board of Directors in creating and driving value. I am thankful for the hard work and dedication of our talented employees, and I am confident they will continue to make many valuable contributions as part of a larger and stronger organization. I look forward to working closely with the Eldorado team to bring our companies together to realise the benefits of this compelling combination and ensure a smooth transition.”

Tom Reeg, President and Chief Financial Officer of Eldorado, concluded: “This acquisition marks further progress toward our goal of strategically expanding our property base to realize benefits of scale, increasing long-term strategic and financial flexibility, and driving shareholder value. Our experience and success over the last two years in integrating the MTR assets and Silver Legacy and Circus Circus operations will serve us well as we add the Isle of Capri assets to our operating base. With our experienced management team, operating discipline and return-focused approach to capital expenditures, we believe the acquisition of Isle of Capri offers a meaningful opportunity for Eldorado Resorts, our shareholders and Isle shareholders. We plan to use the free cash flow expected to be generated by the combined company to reduce leverage and pursue future growth opportunities.”

Prior to the deal, Eldorado operated seven properties in five states, including the Eldorado Resort Casino, the Silver Legacy Resort Casino and Circus Circus Resort Casino in Reno, the Eldorado Resort Casino in Shreveport, Scioto Downs Racino in Columbus, Mountaineer Casino Racetrack & Resort in Chester and Presque Isle Downs & Casino in Erie.

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