Exclusive: Casino mogul Fertitta approaches Caesars about merger – sources

(Reuters) – Tilman Fertitta, the billionaire owner of the Golden Nugget Casinos, has approached U.S. casino operator Caesars Entertainment Corp. about merging it with his own gaming empire, people familiar with the matter said on Wednesday.

Fertitta, whose holdings also include the Houston Rockets National Basketball Association and the Landry's team, are contemplating a merger in which Caesars would be acquiring, and Caesars shareholders, including private equity firms, Apollo Global Management LLC, and TPG Global, would in the combined company, the sources said.

It is unclear whether it is attractive, given the company has a market capitalization of $ 6.3 billion and Fertitta's net worth is pegged by Forbes at $ 4.5 billion, the sources said.

Caesars has been focused on the past, and is currently exploring a bid for Jack Entertainment LLC, a casino company owned by Dan Gilbert, founder of online mortgage lender Quicken Loans Inc. Jack could be worth as much as $ 3 billion, one of the sources said.

The persons cautioned that a deal is not certain and is not identified because the matter is confidential. Caesars, Apollo and TPG declined to comment, while representatives of Fertitta and Jack did not respond to requests for comment.

Caesars shares rose 8 percent on the news, and were trading up 5.8 percent at $ 9.62 in late morning trading in New York on Wednesday. Caesars reported second-quarter earnings in August, when the company forecasted growth for the third quarter.

Caesars, whose casinos include the Caesars, Harrah's and Horseshoe brands, emerged from bankruptcy last year after failing to cope with some $ 25 billion in debt. Its total debt now stands at around $ 9 billion.

Caesars, which operates 49 casinos in 13 U.S. states in Britain, Egypt, Canada and South Africa, is playing catch-up with rivals such as MGM Resorts International and Wynn Resorts Ltd, as it gradually pays down debt and improves profitability.

It has been investing in its U.S. sports-betting business and is exploring ways to expand in emerging markets given its absence from Macau, a haven for gamblers in Asia.

In recent years, the U.S. gambling industry has faced a shakeup as a result of the legalization of gaming in states that used to prohibit it. Among the states that have been opened up to Kansas, Maine, Maryland and Ohio.

Last November, Caesars agreed to buy Centaur Holdings LLC for $ 1.7 trillion in cash, to expand in Indiana.

Reuters reported last month that Hedge Fund HG Vora Capital Management LLC had built a 4.9 percent stake in Caesars, seeking to persuade it to explore options that could include divestures or an outright sale of the company.