“Companies that grow for the sake of growth or that expand into areas outside their core business strategy often stumble. On the other hand, companies that build scale for the benefit of their customers and shareholders more often succeed over time” Jamie Dimon CEO JPMorgan Chase
Caesars Entertainment Corp’s (CZR) move last week to acquire William Hill PLC (WMH) is a classic play right out of the Jamie Dimon playbook as noted in the above quote. You can impose any number of standard metrics to the proposed deal that translate to a stock that is forecasted by analysts to run a wild best case worse case gauntlet between $54 and $75 a share going forward. In brief, the questions fairly asked here if you go by familiar data points this this: Is CZR grabbing for seconds before it digests its first main dish? Does a case of indigestion await management? Taking on $17.3b in debt to buy CZR is one thing. Then in fast order, reach for a UK sports betting giant in a deal now valued at $3.7b is quite another.foxbusiness.com markets>williamhill>backs>caesars
Or is it? We’t think this big appetite reach by CZR is all about strategy, not financial engineering.
It is an example of a clear headed vision that will be transformative. It’s a perfectly logical move made with speed and daring at a time when many observers felt, that El Dorado (ERI) would be too busy digesting and deleveraging CZR to do anything dramatic on its sport betting business but possibly spin it off. This is not a numbers cruncher’s exercise. There are financial aspects of this deal that can be head scratchers. This is all about recognizing and acting swiftly when you know you have a hot hand. CZR has a hot hand.