MGM Resorts International reportedly eyeing merger with Caesars Entertainment

SPRINGFIELD –MGM Resorts International, parent company of MGM Springfield, is reportedly in talks to merge with casino rival Caesars Entertainment, according to the New York Post.

But the merger would face scrutiny from federal regulators  — the U.S. Securities and Exchange Commission and the Federal Trade Commission — as well as from state gaming regulators across the country, according to the Press of Atlantic City, New Jersey.

In Massachusetts, Caesars once tried to grab a piece of the state’s casino pie. It partnered with Suffolk Downs to compete for the eastern Massachusetts license that went to Wynn Resorts, which is now developing the Encore Boston Harbor resort casino. But the Massachusetts Gaming Commission deemed Caesars ineligible to do business in the Commonwealth.

MGM was the second-largest casino operator in the United States, based on revenue, in 2017, while Caesars was the fourth-largest.

The possible merger was first reported in The New York Post on Monday.

The Post said MGM has hired investment bank Morgan Stanley and law firm Weil, Gotshal Manges to look into a possible deal.

Activist hedge funds, which own about a quarter of Caesars, are pushing for the deal, according to The Post., the website of the city’s CBS affiliate, said the merger would give the combined company an overwhelming presence in Las Vegas.

“I think these companies are always exploring their options through things like this,”  David Schwartz, the director of the Center for Gaming Research at UNLV, told the station. “They’re always looking at mergers and consolidations, so it’s not really surprising MGM would be considering this right now.”

Business in Vegas was slow this summer, as both companies admitted in their recent earnings reports to investors.

Caesars operates more than 50 resorts and casinos across the United States and Canada, according to its website. That includes the Caesars, Bally’s, and Harrah’s resorts in Atlantic City that compete square on with MGM’s Borgata Hotel Casino. 

Caesars also owns properties on the Gulf Coast, including one in New Orleans. MGM has Beau Rivage in Biloxi, Mississippi. Unlike MGM, which recently opened the $960 million MGM Springfield resort casino, Caesars has no New England or New York locations.

At midday Wednesday, MGM’s stock — MGM on the New York Stock Exchange — traded at $27.790 a share, up  41 cents or 1.5 percent. Caesars, CZR on the NASDAQ — traded at $9.51 a share up 1 cent or 1 percent on the day.

Caesars told investors this week that it recently received a letter from Golden Nugget, proposing that Caesars acquire substantially all of Golden Nugget’s restaurant, hospitality, entertainment and gaming businesses in exchange for a significant minority of Caesars’ common shares.

But Caesar’s said that plan would not be consistent with the its  plans to create and enhance shareholder value over the long term.

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