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Icahn to divest Tropicana in USD 1.85bn deal
Posted on Tuesday, 17 April 2018 08:49
Tropicana Entertainment, which is majority owned by Icahn Enterprises, has agreed to sell its real estate investment trust (REIT) to Gaming and Leisure Properties and merge its hotel and gambling operations with Eldorado Resorts in a deal said to be worth a total USD 1.85 billion.

Under the terms of the agreement, Carl Icahn is looking to offload six of the eight casino properties run by the target to the aforementioned REIT for USD 1.21 billion.

This will then be followed by the casino operations, including the crown jewel in Atlantic City being sold to Eldorado for the remaining USD 640.00 million, including a lease for the locations from Gaming and Leisure Properties for an initial 15-year period.

Tropicana will not be offloading its Aruba assets as part of either transaction, and will instead dispose of the division separately as a condition of closing, with proceeds from all the sales to be further adjusted to pay corporate level taxes.

Completion is slated for the second half of 2018, following the gaming approvals and the termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Carl Icahn, chairman of the vendor, noted: “Icahn Enterprises first acquired an interest in Tropicana in 2008. Tropicana was bankrupt and desperately needed new leadership.

“At that time, we identified this undervalued asset as being a perfect situation to deploy our modus operandi, by which we seek to acquire undervalued assets, nurture, guide and improve their condition and operations, and to ultimately greatly enhance value for all shareholders.”

He added that “we turned Tropicana into a great casino company that today owns seven casinos”.

Eldorado noted that the purchase price, after the application of the target’s net cash-on-hand and cash flow generated from operations through closing, represents an estimated 12 months earnings before interest, taxes, depreciation and amortisation multiple of 6.6x.

The company will gain seven casinos across six states, comprising Nevada, Indiana, Mississippi, Louisiana, Missouri and New Jersey.

These assets include 7,900 slot machines, 265 table games and about 5,400 hotel rooms, along with dining, retail and entertainment amenities.

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