Eldorado Resorts to buy Isle of Capri Casinos in $1.7 billion deal

(Reuters) - Gaming company Eldorado Resorts Inc ERI.O said it would buy rival Isle of Capri Casinos Inc ISLE.O for $1.7 billion, including debt.

Isle of Capri will receive 1.638 shares of Eldorado common stock, or $23 per share, which represents a premium of 35.9 percent to Isle of Capri’s Friday closing price.

The deal includes Isle of Capri’s $929 million of long-term debt, the companies said.

Shares of Isle of Capri, which operates casinos under the Isle and Lady Luck brands, were up 29.4 percent in premarket trading on Monday.

Eldorado, which owns seven casinos across five U.S. states, was up 8.6 percent.

“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,” Eldorado Resorts Chief Executive Gary Carano said in a statement.

Following the deal, Nevada-based Eldorado will add 13 casino resorts and will have 20,800 slot machines and video lottery terminals, more than 560 table games and over 6,500 hotel rooms.

The deal will add to Eldorado’s free cash flow and diluted earnings per share.

Eldorado has received financing for the deal totaling $2.1 billion from financial adviser J.P. Morgan.

Credit Suisse is Isle of Capri’s financial adviser.

Reporting by Arunima Banerjee in Bengaluru; Editing by Maju Samuel