Eldorado Resorts Inc. (NYSEMKT: ERI) said Monday that it has entered a definitive agreement to acquire Isle of Capri Casinos Inc. (NASDAQ: ISLE) for $23 per share in cash or 1.638 shares of Eldorado stock. The $1.7 billion deal includes the assumption of $929 million in Isle of Capri long-term debt. The deal represents a premium of approximately 35% to Isle of Capri’s closing price on Friday.

Isle of Capri shareholders may elect how they wish to be compensated, subject to proration such that the outstanding shares of the company’s common stock will be exchanged for aggregate consideration comprised of 58% cash and 42% Eldorado Resorts common stock. The deal is expected to be completed in the first quarter of 2017, after which time Isle of Capri shareholders will own about 38% of the combined companies’ outstanding shares.

Eldorado Resorts chairman and CEO Gary Carano said:

The acquisition of Isle of Capri represents a transformational growth opportunity for Eldorado and is a significant milestone in the successful ongoing execution of our long-term strategy to opportunistically expand our regional gaming platform through accretive acquisitions. … Strategically, the combination builds the scale of our gaming operations and further diversifies the geographic reach of our operations without any overlap with our existing properties.

We intend to implement our strategy of focusing on margin enhancement and customer service and experiences across the portfolio by marrying best practices from both companies. … Combining the assets, management, personnel, operations and other resources of these two organizations is expected to create substantial near- and long-term synergies.

Stockholders who own approximately 24% of Eldorado Resorts’ outstanding shares and 35% of Isle of Capri’s outstanding shares have signed agreements to vote in favor of the transaction.

Eldorado Resorts has received committed financing of $2.1 billion from JPMorgan, and there is no financing contingency on the transaction. Two members of the Isle of Capri board of directors will be named to the Eldorado Resorts board immediately after the deal closes.

The transaction is expected to be accretive to Eldorado Resorts’ operating results on closing, but no dollar amount was given. The company did say that the pro forma combined revenues at the end of the most recent quarter for each casino operator would have been nearly double Eldorado Resorts’ on a standalone basis. Combined adjusted EBITDA was about $400 million, including the identified cost synergies.

Eldorado Resorts stock traded up about 8.6% in Monday’s premarket, at $15.47 in a 52-week range of $8.47 to $15.60. The stock’s consensus 12-month price target is $17.33.

Isle of Capri’s stock traded up about 30% to $21.90, in a 52-week range of $10.62 to $21.43. The consensus price target was $20.25.

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