Twin River to Acquire Two Eldorado Casinos for $230 Million
Twin River Worldwide Holdings has announced Thursday that it will acquire two Eldorado Resorts casinos — the Isle of Capri Casino Kansas City, Missouri, and the Lady Luck Vicksburg, Mississippi — for an all-cash transaction of $230 million.
The Rhode Island-based company, which operates the state’s only two casinos, the Twin River Lincoln and the Twin River Tiverton, has been on something of an acquisition spree of late.
Earlier this year it completed a reverse takeover of Dover Downs racino in Delaware and has also agreed to purchase three small casinos in Black Hawk, Colorado, from Affinity Gaming, the Golden Gates, Golden Clutch and Mardis Gras.
Twin River also owns the Hard Rock Casino in Biloxi, which it purchased in 2014, as well as a horse track and three greyhound tracks in Colorado.
The Lady Luck has been on the market for a while. In March 2018, Churchill Downs Inc agreed a deal to acquire the property, along with Presque Isle Downs & Casino in Erie, Pennsylvania, from Eldorado, but the Lady Luck part of the deal fell through due to unspecified complications with the FTC arising from antitrust issues.
Churchill Downs already owned the Riverwalk Casino & Hotel in Vicksburg, which was adjacent to the Lady Luck, as well as Harlow’s Casino Resort, 80 miles away, in Greenville.
But now it’s Eldorado that’s grappling with possible antitrust issues and is seeking to trim some fat in preparation for its $18 billion merger with Caesars Entertainment.
A tie-up between two of the biggest regional casino operators in the US is likely to create several markets where the combined company is too dominant for the FTC’s tastes.
Both Eldorado and Caesars own properties in Mississippi. But there are also likely to be sell-offs in Atlantic City – where a combined company would own four of the market’s nine casino licenses.
Trimming the Fat
The Missouri market is an even bigger concern for Eldorado. On June 17, Eldorado announced the sale of two additional casinos in Missouri — as well as one West Virginia — to Century Casinos and VICI Properties Inc. The latter is a real-estate investment, an independent spin-off of Caesars that emerged from its chapter 11 reorganization.
As well as smoothing over antitrust issues, these deals will help alleviate some of Eldorado’s debt, which will help in attracting financial backing for the deal.
“The deal is modestly deleveraging and another step towards removing potential overhangs from regulatory review for the Caesars transaction as it, in our view, eliminates any potential issues from regulators pertaining to Kansas City market exposures,” said Deutsche Bank analyst Carlo Santarelli in a note this week.
For Twin River, the deal shows investors that the company is “serious about and capable” of funnelling its excess capital into growth acquisitions, according to analysts for Stifel Investment Services.
Twin River said in an official statement that it is particularly interested in the Isle of Capri Kansas City property because it is located in an area near downtown that has been earmarked for development by local officials.
The Isle of Capri, formerly the Hilton Flamingo, was in 1999 the target of an acquisition bid by future US president Donald Trump, which he later withdrew.
Twin River said it believes there is an “opportunity for capital investment in the property which we believe will have a transformative impact and integrate well with local development efforts in the area.”