US – Caesars spending $1.7bn on two Indiana racinosBy Phil - 17 November 2017
Caesars Entertainment is buying Indiana casino operator Centaur Holdings for $1.7bn in cash, including $1.625bn at closing and $75m in deferred consideration.
The deal will add Hoosier Park Racing and Casino in Anderson, Indiana, and the Indiana Grand Racing and Casino in Shelbyville, Indiana to its Total Rewards network. Casears is also hoping to add table games to the properties, pending regulatory approval.
“The addition of Centaur is the first example of our post-emergence, inorganic growth strategy,” said Mark Frissora, President and Chief Executive Officer of Caesars Entertainment. “The acquisition of Centaur represents an excellent opportunity to enter into a growing region. We anticipate that the deployment of Total Rewards will bring substantial benefits to current Centaur customers and the implementation of our centralised supply chain and efficient operating model will drive synergies.”
Centaur welcomes more than 6.5 million guests each year across its properties and serves more than 1.1 million members as part of its loyalty program. Caesars Entertainment considers central Indiana an attractive region for investment based on the combination of under-penetration and favorable economic fundamentals. Hoosier Park and Indiana Grand, which serve the Indianapolis area, will add to the Caesars network, which includes Horseshoe Hammond and Horseshoe Southern Indiana. Horseshoe Hammond serves the Chicagoland area and Horseshoe Southern Indiana serves the southern Indiana and Louisville area.
“We are impressed with Centaur’s operations and culture, and the strong presence it has built in its host communities. Together, we will build on our respective value creation and execution achievements for the benefit of customers, employees and local partners,” Mr. Frissora said. “We look forward to welcoming Centaur’s properties, guests and employees to the Caesars Entertainment family.”
Offering gaming, racing, dining, and entertainment, both Hoosier Park and Indiana Grand feature over 2,000 of the latest slots and electronic table games, multiple dining outlets, and both live and simulcast horse racing.
“We believe the acquisition of Centaur is the best use of capital to support our growth plans and the long-term value of Caesars Entertainment. Our network expansion plan is off to a great start with this strategic transaction and we continue to have a strong financial position with solid cash flows to pursue other expansion opportunities with attractive returns,” concluded Mr. Frissora.
The transaction is subject to receipt of regulatory approvals and other customary closing conditions and is expected to close in the first half of 2018. Transaction financing remains under consideration subject to determination of final arrangements. The purchase price represents an 8.3x implied multiple in year two following the closing of the transaction, inclusive of expected synergies.
Assuming the introduction of table games and certain synergies, the effective purchase price multiple would be less than 7x at that time.