The stock market got out to a quiet start on Monday morning, as investors tried to remain patient as they waited to see what would come from the G-20 meeting in Japan later this week. Many market participants are hopeful that leaders of the U.S. and China will finally come to a longer-term resolution of trade disputes, although skeptics question whether an acceptable deal is achievable. As of around 11:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 35 points to 26,754. The S&P 500 (SNPINDEX: ^GSPC) was roughly unchanged at 2,951, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) gave back 9 points to 8,022.
There's still plenty going on in the business world as companies vie to compete against traditional rivals and upstarts in related industries. For Caesars Entertainment (NASDAQ: CZR), an acquisition bid from Eldorado Resorts (NASDAQ: ERI) will create a gaming industry giant with plenty of risk. Meanwhile, Walmart (NYSE: WMT) faced a legal attack from an unlikely source, as airline JetBlue Airways (NASDAQ: JBLU) took issue with the name of a service the retail giant has launched.
Shares of Caesars Entertainment jumped 15% after the casino resort operator said that Eldorado Resorts had made a $17.3 billion bid for the company. The move will create the largest gaming business in the U.S. market, with each bringing its own array of regional properties into the mix.
Specifically, Eldorado will give Caesars investors $8.40 in cash plus 0.0899 shares of Eldorado for every Caesars share they own. Eldorado estimated the total value of that package at $12.75 per Caesars share, and it means that the acquirer will have to come up with $7.2 billion in cash as well as offering 77 million new common shares. The combination is essentially a merger of equals, with historical Eldorado shareholders owning 51% of the post-merger entity while Caesars shareholders will have 49%.
The two companies seem excited about the opportunity that they'll have. With about 60 casino resorts in 16 states, the combined entity will have a clear national presence. Remodeling on the Las Vegas Strip will improve Caesars' performance in the nation's biggest gaming market, and significant synergies could save the combined company $500 million in the first year after closing.
Skeptics have noted that buying Caesars would be another risky bet for Eldorado, especially given the debt that it will take on in doing the deal. That's probably one reason why Eldorado shares are down 9% this morning. But no matter what happens, the merger will certainly bring some casino-style entertainment to the Wall Street crowd over the next several months.
Meanwhile, shares of Walmart remained close to unchanged following news that the retailer had gotten sued. JetBlue Airways might seem like the least likely company to have any problems with the retail giant, but a trademark infringement case aims at a strategy that Walmart is using with its Jet.com business.
JetBlue is arguing that Walmart's Jetblack personal shopping service will create confusion among customers due to the similarity in their two names. Jetblack allows its members to send a text message to make shopping requests. A personal assistant then provides customized service to meet those requests.
On its face, JetBlue's suit might seem frivolous, but the airline makes a couple of compelling arguments. First, it states that Walmart intends to incorporate other services, including Jetgold and Jetsilver, for future projects. In addition, the airline believes that Walmart will offer travel-related services, further encroaching on JetBlue's industry and creating the potential for more confusion.
Walmart's acquisition of Jet.com was aimed at making a bigger splash in the e-commerce world, and its early success has been enough to attract the attention of the airline. Investors can expect JetBlue and Walmart to reach some settlement of the matter, and in the interim, news of the lawsuit will likely just bolster awareness of the premium shopping service.
Hope you enjoyed today's article.