You have to believe right now that the lawyers and numbers crunchers in and around the Eldorado Resorts Inc. deal (ERI) to acquire Caesars Entertainment Corp. (NASDAQ:CZR) are massaging scenarios as the coronavirus continues to deflate sector values in an endless downward spiral at the moment. The questions they could be wrestling with are many. But only one qualifies as a burning: The deal was closed pre-virus, with valuations then based on current and recent trades. Since then, we have fallen into the dark ages. The Roman Empire collapsed around 460AD, and it took nearly 700 years before the world emerged from the Dark Ages period into the early Renaissance. While we are now in clearly in a dark ages market, we are hopefully not looking at 700 years before we see the light again.
They say that those who don’t learn from history are condemned to repeat it. We think there are enough adults in the room among the top movers and shakers of this ERI deal to recognize that investors deserve clarification on the possibility of repricing before closing sometime within the next 90 days. Carl Icahn has casually raised the possibility. Although he is known as a man who never leaves a dime on the table he thinks he can sweep into his kitty, he is also one of the key adults in this drama.
The history first
The deal was largely the brainchild of Icahn and ERI CEO Tom Reeg. Both these men are among the savviest operators in the gaming business: Call them Mr. Inside and Mr. Outside. There were other potential suitors. But Icahn was the key here because, from his perspective, Reeg was the only guy who was short on talk and long on action: he put money on the table while others blew up trial balloons.
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