Icahn to sell Tropicana Entertainment for $1.85B

Eldorado Resorts Inc. and Gaming and Leisure Properties Inc. entered into an agreement to jointly purchasing Carl Icahn’s casino operator Tropicana Entertainment Inc. for $1.85 billion, the pair announced Monday.

Under terms of the deal, GLPI will pay $1.21 billion for Tropicana’s real estate and lease the properties to Eldorado. Eldorado will pay the remaining $640 million of the purchase price.

The lease to Eldorado is for 15 years, with renewals up to 20 years. The initial rent, under terms of the lease, is expected to be approximately $110 million.

GLPI is expected to acquire the Tropicana property portfolio, except the MontBleu Casino Resort & Spa in South Lake Tahoe and the Tropicana Aruba Resort and Casino.

The deal does include the Tropicana Casino and Resort in Atlantic City.

Gary Carano, chairman and CEO of Eldorado said his company’s proposed acquisition of the Tropicana portfolio will help increase the scale of its gaming platform and drive free cash flow growth.

“Our recent initiatives to enhance shareholder value, including the Tropicana transaction and our agreement to divest two properties, reflect significant milestones in the successful ongoing execution of our long-term strategy to opportunistically expand our regional gaming platform. Over the last 12 months, we have created tremendous shareholder value through our ability to realize and exceed the anticipated synergies from the Isle of Capri transaction which quickly reduced our initial purchase price multiple and we expect to achieve the same with the Tropicana transaction.

“The acquisition of seven Tropicana Entertainment properties will allow Eldorado to enter two new gaming jurisdictions and deliver additional financial and geographic diversity to our operating base. We have identified $40 million of synergies that we expect to realize in the first year of our ownership. We believe the financing structure for the transaction, which includes the participation of a real estate investment trust, represents an innovative means to drive growth and add value for our shareholders while maintaining financial flexibility as we continue to own the majority of the underlying real estate across our remaining property portfolio.”

Milbank Tweed Hadley & McCloy LLP is legal counsel to Eldorado in the deal.