The two giants of the Las Vegas Strip and gaming throughout the country, MGM Resorts International and Caesars Entertainment, could be exploring a potential merger, according to the New York Post. The story cites unnamed sources with knowledge of the matter. A spokesperson from MGM would not comment on the possibility, as the company won't address rumors. At press time, Caesars had not responded to queries on the topic.
Speculation has been fueled by two key announcements Caesars made last week in conjunction with its third-quarter earnings call: first, that the board had rejected an offer to merge with Golden Nugget, and second, that CEO Mark Frissora will be stepping down in February. Frissora has led Caesars through its restructuring following its 2015 bankruptcy declaration.
The rumor mill has since kicked in, as speculation around potential Caesars suitors has intensified. The New York Post sources mentioned Wynn and the Genting Group as additional, secondary possibilities.
Consolidation has played a major role in the Las Vegas Strip as we know it. Thanks to MGM's merger with Mandalay Bay Corp. in 2005 and a number of major casino acquisitions before that, MGM now owns a dozen sprawling Strip properties. Caesars, which acquired the Planet Hollywood Las Vegas casino in 2010, is the other major Strip presence, with eight properties of its own. The two giants also have a major stake in Atlantic City and own properties throughout the U.S. Both are also in the early stages of expanding internationally, with MGM opening in two resorts in China and Caesars entering the global market via licensing agreements in Dubai and Mexico.
Caesars' stock value climbed yesterday following the speculation, but some analysts have cast doubt on the likelihood any such mergers will happen. The stockbroking division of the Japanese financial firm Nomura issued a note that played down the situation, according to GGRAsia, a casino-industry news site in Asia.
"We seriously doubt that, even if there are such discussions, they will go anywhere," the Nomura note said about the MGM-Caesars rumors, according to the site. Nomura went on to cast doubt about any Caesars merger at all. The note continued, "We also find it a dubious proposition that either Wynn Resorts or Genting is in a position to acquire Caesars Entertainment.... We reiterate our positive view on Caesars Entertainment, which is based not on a takeover premium but on improving operational performance with a new CEO, as well as stronger demand trends in Vegas next year."