October 17, 2018 / 2:56 PM / a month ago

Exclusive: Casino mogul Fertitta approaches Caesars about merger - sources

(Reuters) - Tilman Fertitta, the billionaire owner of the Golden Nugget Casinos, has approached U.S. casino operator Caesars Entertainment Corp about merging it with his own gaming empire, people familiar with the matter said on Wednesday.

Tilman J. Fertitta speaks at a panel for the television series "Billion Dollar Buyer" during the NBCUniversal summer press day in Westlake Village, California, April 1, 2016. REUTERS/Mario Anzuoni

Fertitta, whose holdings also include the Houston Rockets National Basketball Association team and restaurant and entertainment company Landry’s, is contemplating a reverse merger in which Caesars would be the acquirer, and Caesars shareholders, including private equity firms Apollo Global Management LLC and TPG Global, would remain shareholders in the combined company, the sources said.

It is unclear whether Caesars will find any offer from Fertitta attractive, given the company has a market capitalization of $6.3 billion and Fertitta’s net worth is pegged by Forbes at $4.5 billion, the sources said.

Caesars has been focused on other acquisitions since emerging from bankruptcy last year, and is currently exploring a bid for Jack Entertainment LLC, a casino company owned by Dan Gilbert, founder of online mortgage lender Quicken Loans Inc. Jack could be worth as much as $3 billion, one of the sources said.

The persons cautioned that a deal is not certain and asked not to be identified because the matter is confidential. Caesars, Apollo and TPG declined to comment, while representatives of Fertitta and Jack did not respond to requests for comment.

Caesars shares rose as much as 8 percent on the news, and were trading up 5.8 percent at $9.62 in late morning trading in New York on Wednesday. The stock had taken a hit after Caesars reported second-quarter earnings in August, when the company forecasted slower growth for the third quarter.

Caesars, whose casinos include the Caesars, Harrah’s and Horseshoe brands, emerged from bankruptcy last year after failing to cope with some $25 billion in debt. Its total debt now stands at around $9 billion.

Caesars, which operates 49 casinos in 13 U.S. states as well as in Britain, Egypt, Canada and South Africa, is playing catch-up with rivals such as MGM Resorts International and Wynn Resorts Ltd, as it gradually pays down debt and improves profitability.

It has also been investing in its U.S. sports-betting business and is exploring ways to expand in emerging markets given its absence from Macau, a haven for gamblers in Asia.

In recent years, the U.S. gambling industry has faced a shakeup as a result of the legalization of gaming in states that used to prohibit it. Among the states that have recently opened themselves to casinos are Kansas, Maine, Maryland and Ohio.

Last November, Caesars agreed to buy privately owned casino and horse racing company Centaur Holdings LLC for $1.7 billion in cash, to expand in Indiana.

Reuters reported last month that hedge fund HG Vora Capital Management LLC had built a 4.9 percent stake in Caesars, seeking to persuade it to explore options that could include divestitures or an outright sale of the company.

Reporting by Greg Roumeliotis in New York; Editing by Jeffrey Benkoe and Matthew Lewis

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