Carl Icahn is known for his uncanny ability to pick up assets which are dirt cheap or commanding low valuation. He turnaround those assets and sells them at an appropriate time for a massive windfall. As is the case, Icahn bought Tropicana in 2008 which was under bankruptcy. He appointed Tony Rodio to run the operations. It’s worth noting, at the end of last year, Tropicana’s revenue was $898 million with its flagship property Tropicana Atlantic City bringing in $390 million to its kitty.
Expanding footprint
Eldorado currently manages 20 properties in the U.S. Post this deal, it gains seven more properties and expands its footprint to two more states. The company has been on a buying spree for past few years. Last year, the company bought a casino based in Reno for $1.1 billion, and on Monday it also gobbled up a casino based in Elgin, Illinois for $327.5 million. It seems the gambling industry is up for consolidation.
Thumbs up from the market
Subject to the approval of the boards, the Tropicana deal is expected to close by the end of 2018. It seems investors are gung-ho about the deal. After the market closed on Monday, Tropicana’s share has gained 27%, while Eldorado and GLPI’s shares have gained 16% and 4%.