Reports are emerging that MGM Resorts and Caesars Entertainment are continuing their talks for a potential merger between the two massive casino firms. Sources close to both companies have said that while talks are ongoing, there has been no formal offer placed on the table. However, MGM is apparently taking the potential merger seriously and has hired Morgan Stanley to assess the practicality of a merger. Should it happen, it would create a single casino company worth more than $50 billion.
MGM Resorts and Caesars Entertainment are reportedly engaged in talks about a potential merger. This would create a $50+ billion casino resort giant.
MGM Resorts Seeks Friendly Merger
The CEO of Caesars Entertainment, Mark Frissora, announced last week that he was leaving the company in February 2018. Various shareholders have been trying to push for his resignation in the last few months. Many people suspect that, without a CEO, Caesars could be available for a merger. This year has been difficult for both casino giants. MGM Resorts’ stock price is down 15% this year, while Caesars is down around 25%. However, both firms expected to have a poor Q3 but performed better than expected.
Whatever happens between Caesars and MGM, it is likely to be a friendly merger. Now that Frissora has resigned, it seems more likely that a deal is possible. However, several insiders believe that MGM is not the only company looking at Caesars right now. It is also thought that Wynn Resorts may try to merge, provided the company keeps its Boston license.
FTC May Stand Between MGM Resorts and Caesars
The only real issue could stand in the way of the MGM-Caesars merger would be the Federal Trade Commission (FTC). Should the companies merge, then they would own around 50% of all hotel rooms available in Las Vegas. This could potentially cause the FTC to step in to stop the merger, for fears it may create a monopoly.
Back when DraftKings and FanDuel tried to merge in 2017, the FTC blocked the deal. However, that deal would have meant the resulting company would have controlled over 90% of the Daily Fantasy Sports market. The FTC ruled that the merger would not be good for customers, who would be deprived of the benefits of direct competition. The FTC may worry about a similar thing happening in the casino resort business, with this merger. Only time will tell.