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MGM Resorts Hires Morgan Stanley To Look Into Caesars Merger

Written By Nicholaus Garcia | Updated:
MGM Resorts International is reportedly looking into the benefits of a merger with Caesars Entertainment.

Against the backdrop of several casino operators partnering with professional sports leagues and the highly watched midterm elections, MGM Resorts International has quietly begun to study the possibility of merging with Caesars Entertainment.

First reported by the New York Post, MGM has hired investment bank Morgan Stanley and law firm Weil, Gotschal & Manges to begin researching the merger possibility.

MGM + Caesars possibility

The idea of two major casino operators partnering up is may not be so crazy.

A few weeks ago, Caesars rejected an offer from Golden Nugget and their owner Tilman Fertitta. Fertitta inquired about a potential merger possibility but the Caesars’ board members were not interested.

According to the New York Post, Chaney Sheffield, an ex-Morgan Stanley investment banker, is pushing the partnership. The reason? To save money on “overhead and marketing.”

Sheffield heads the lodging and gaming investments division of Canyon Partners, which holds leading stakes in both Caesars and MGM. Other activist hedge funds hold about 25 percent of Caesars. These funds are reportedly pushing the MGM deal.

Should MGM and Caesars decide this lucrative partnership is the way to go, they would own half of the hotel industry in Las Vegas and Atlantic City. Together, both major companies would hold a whopping enterprise value of $52 billion.

Currently, MGM is worth $30 billion and Caesars at $22 billion.

Other merger partners

According to the Post article, MGM may not be the only prize Caesars is eyeing.

Reports say Wynn Resorts and Malaysia’s Genting Group are also in the mix. Wynn Resorts is valued at around $18 billion. The Genting Group owns Resorts World at Aqueduct Racetrack.

Other long shots are private equity firms that have licenses to operate casinos like the Blackstone Group.

MGM and Caesars declined to comment.

Caesars has 49 casinos in 13 states. Following Monday’s New York Post article, share prices were up 2.85 percent.

With properties spread across the country and states beginning to take a more in-depth look at sports betting legislation, the company has positioned itself quite nicely.

Although Caesars has been underperforming with year-to-date shares off by 25 percent, it does make for a good acquisition.

States looking to introduce sports betting bills following the midterm elections include Illinois, Indiana, Kentucky, Kansas, Ohio and the District of Columbia.

The US Supreme Court opened the door for sports betting with its landmark decision on May 14.

Nicholaus Garcia Avatar
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Nicholaus Garcia

Nick Garcia is a senior reporter for PlayUSA. Garcia provides analysis and in-depth coverage of the gambling industry with a key focus on online casinos, sports betting and financial markets. Garcia has been covering the US gambling market since 2017. He attended Texas Tech University as an undergrad and received a Master of Arts in Journalism from Columbia College Chicago.

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