In news that’s considered somewhat surprising, Caesars Entertainment (NASDAQ: CZR) CEO Tom Reeg is expected to lead the expansive Landry’s suite of business, including Golden Nugget casinos, after Tilman Fertitta’s Fertitta Entertainment Inc. (FEI) closes its $17.6 billion acquisition of Caesars.
Our own Vital Vegas broke the news late Monday, noting that it is unusual for the chief executive officers (CEOs) of acquired casino companies to hang around following large-scale mergers and acquisitions. Previously, it was disclosed that Reeg would stay on board to oversee the casino business, which will be a marriage of Caesars and Golden Nugget.
With Reeg expected to run the Landry’s show, he’ll be in charge of Fertitta’s extensive portfolio of gaming, leisure and lodging interests, but he will not be involved with the Fertitta Automotive Group, the Houston Rockets or the billionaire’s various commercial real estate holdings in the Houston area.
An Interesting Choice by Fertitta
Assuming the Vital Vegas report is accurate (he’s usually spot on), a case can be made that keeping Reeg around and essentially giving him a promotion is an interesting choice by Fertitta.
Since Eldorado Resorts, the company previously run by Reeg, closed its acquisition of “old Caesars” on July 20, 2020, shares of “new Caesars” have lost 24.2% while shares of rival MGM Resorts International (NYSE: MGM) rose nearly 75%. Perhaps life will be easier as the CEO of a private company, which Caesars will be following the acquisition, which is expected to close by mid-2027.
Reeg’s ascent to the top of a company with a 600-plus restaurant empire, which includes the Bubba Gump’s, Chart House, Del Frisco’s, Mastro’s and Morton’s brands, among others, is interesting for another reason. The Caesars boss famously said in an interview “God forbid they stop at McDonald’s on the way home” regarding dining comps to Caesars’ gamblers.
While Caesars has been slow to reduce debt in recent years, the company has been adept at divesting non-core assets under Reeg’s stewardship – a skillset that could prove essential as the combined Caesars/Golden Nugget could be forced to unload some casinos in select jurisdictions.
Caesars Q3 Update
The Harrah’s operator delivered third-quarter results after the close of U.S. markets today, telling investors it lost 61 cents a share on sales of $2.94 billion. Wall Street expected a loss of 11 cents a share on slightly higher revenue.
The Las Vegas Strip was again the culprit, but Caesars noted revenue at its regional casinos climbed nearly 6% during the September quarter. That growth may allay concerns about the ongoing negotiations with landlord VICI Properties (NYSE: VICI) on the regional casino master lease.
Due to the pending acquisition, Caesars isn’t holding a conference call to discuss the results.
Rephrased by The Mystic Gambler