Diamonds and Dogs

6/24/19

A deal in the casino business. Caesars Entertainment (CZR) is up 16% after agreeing to merge with Eldorado Resorts for $8.6 billion. The combined company will have $6.7 billion in annual revenue and $3.6 billion of annual earnings before interest, taxes, depreciation, amortization, and rent expense, or Ebitdar, from 60 properties—including several on the Las Vegas Strip such as Caesars Palace, Paris, Harrah's Las Vegas, and Bally's. Caesars' biggest investor, Carl Icahn—who owns nearly 15% of the company—praised the deal, however many Eldorado holders may balk at the deal since it requires taking on $19 billion in debt. Ouch.

A triple dose of disappointing news for Bristol Myers (BMY). The drug company is down 6% on a plethora of news. Bristol is working to allay FTC concerns over its proposed acquisition of Celgene by divesting Celgene's psoriasis drug, Otezla, which generates $1.61 billion of net sales in 2018, or 10.6% of total net product sales for Celgene. The acquisition of Celgene is now being pushed back to the end of 2019 or beginning of 2020 versus the company's prior projection of the third quarter of 2019. Finally, Bristol announced a Phase 3 study evaluating its drug Opdivo for liver cancer which did show improvement, but failed to meet its primary endpoint of overall survival. Not a good day for Bristol or Celgene.