2 of the US's biggest casinos are reportedly exploring a deal

  • MGM is considering a merger with Caesars Entertainment, a report says.
  • Caesars CEO Mark Frissora announced last week that he will step down on February 8.
  • The CEO change should have no impact on ongoing mergers, said Barry Jonas, an analyst at SunTrust Robinson Humphrey.
  • Watch MGM and Caesars Entertainment trade in real time here.

Caesars Entertainment was gaining around Monday, up as much as 3%, after a report said MGM could make a play for the struggling casino chain.

MGM has hired investment bank Morgan Stanley and law firm Weil, Gotshal & Manges to work on a possible merger with Caesars, according to New York Post, citing sources familiar with the matter. Activist hedge funds including Canyon Partners, which holds sizable stakes in both companies, have been pushing for the combination, but no offer is on the table yet, the sources said.

If a deal is completed, MGM and Caesars would own about half the hotel rooms in Las Vegas and Atlantic City, according to the New York Post.

RELATED: Take a look at every major brand that has filed for bankruptcy in 2018 so far:

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Every retailer who filed for bankruptcy in 2018
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Every retailer who filed for bankruptcy in 2018

A'gaci

Women's apparel and accessories retailer A'Gaci filed for Chapter 11 bankruptcy in January. 

Photo credit: Getty

Kiko USA

Cosmetics retailer Kiko USA Inc filed for Chapter 11 bankruptcy protection in January.

Photo credit: Getty

Tops Markets

Tops Markets operates 174 supermarkets — called Tops Friendly Markets. The company filed for bankruptcy protection in February.

Photo credit: Getty

The Bon-Ton Stores

The Bon-Ton Stores owns multiple department store chains including Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's, and Younkers. The company filed for bankruptcy in February.

Photo credit: Getty

Remington Outdoor

Remington filed for Chapter 11 bankruptcy protection in March.

Photo credit: Getty

The Walking Company

The shoe seller The Walking Company, which operates 208 stores in the US, filed for Chapter 11 bankruptcy protection in March.

Photo credit: Getty

Claire's

The jewelry chain Claire's filed for bankruptcy in March.

Photo credit: Getty

Southeastern Grocers

Southeastern Grocers, the parent company of the grocery chains Winn-Dixie, Harveys and Bi-Lo, filed for Chapter 11 bankruptcy protection in March.

Photo credit: AOL

Nine West

Nine West Holdings filed for bankruptcy in April.

Photo credit: Getty

Bertucci's

Italian casual-dining chain Bertucci's filed for Chapter 11 bankruptcy protection in April.

Photo credit: AOL

Rockport

The footwear brand filed for Chapter 11 bankruptcy protection in May.

Photo credit: Getty

National Stores

The owner of the Fallas chain of discount stores filed for bankruptcy in August.

Photo credit: Facebook

Brookstone

Brookstone filed for Chapter 11 bankruptcy protection in August.

Photo credit: Getty

Samuels Jewelers

Samuels Jewelers filed for Chapter 11 with an agreement for bankruptcy financing in August.

Photo credit: Facebook

Toys R Us

Toys R Us filed for bankruptcy in September.

Photo credit: Getty

Mattress Firm

Mattress Firm filed for bankruptcy in October.

Photo credit: PA

Sears

Sears filed for bankruptcy in October.

Photo credit: PA

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Talk of a deal comes at an interesting time for Caesars as CEO Mark Frissora, who helped guide the company through the bankruptcy, announced last week that he will step down on February 8. The activist hedge funds, which together own about a 25% stake in Caesars, are seen to be behind the ouster of Frissora, according to one of the New York Post's sources.
 

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"Mr. Frissora noted on the call that the CEO change should have no impact on ongoing mergers and acquisitions  while the company did explicitly reject," Barry Jonas, an analyst at SunTrust Robinson Humphrey, recently said in a note sent out to clients. 

A combination could be a saving grace for Caesars shareholders who have witnessed the stock plunge 25% since the company's restructuring last October. During the restructuring, Caesars main operating unit, Caesars Entertainment Operating Company (CEOC), emerged from bankruptcy and Caesars Entertainment completed its merger with Caesars Acquisition Company.

Shares were hit hard in August when the casino owner warned of a slowdown in revenues from Las Vegas.

Caesars was down 22% this year.

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