MGM, Caesars in latest merger rumors

Toward the middle of last month, there was talk that Golden Nugget propsoed a merger with Caesars. That offer was almost immediately shelved by Caesars, as it wasn't seen as favorable to the casino giant. Now, talks of another possible merger are starting to make their rounds; this time between Caesars and MGM.

The New York Post reported yesterday that MGM has begun to work on a plan to present to Caesars.  It has sought out Morgan Stanley and a law firm, Weil, Gotshal and Manges, to conduct a due diligence study on the feasibility and costs of a merger.  Once the study is complete, an offer could be put on the table. 

Caesars owns 49 casinos around the world.  Nine of these are on the Las Vegas Strip.  MGM also has nine on the Strip and a potential merger between the two companies would result in a single entity controlling 52% of the poker tables in Las Vegas.  Additionally, it would create the single largest casino operator in the U.S., which is almost definitely not going to sit well with regulators. 

The push for a merger is being primarily led by Canyon Partners, a hedge fund that has a substantial stake in Caesars.  It also owns a piece of MGM and has reportedly said that the two companies coming together would help both reduce expenses leading to greater profits.  Canyon is also said to be the company behind the recent announcement that the current CEO of Caesars, Mark Frissora, is going to be relieved as of February 8 next year. 

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