Investors Betting on Caesars Entertainment

Caesars' shares jumping after the company merges with its affiliate.
3:42 | 12/22/14

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Transcript for Investors Betting on Caesars Entertainment
It's. I'm Michelle Franzen in New York as the financial markets close on Wall Street for this Monday December 22 this is story stock. Caesars Entertainment at Caesars harrah's in Paris casino operator had hit hard times as of late. But shares of the company are jumping after it purchased its affiliate Caesars acquisition company. In an all stock deal even though for today's move Caesars stock is down big almost 30% in 2014 alone. To explain what is going on with caesar's I'm joined by Lisa Allen senior reporter at the deal hi there Lisa. Hi thanks for having me Phillips take a look at that deal what exactly happened. So the right comic Las Vegas gaming company is merging with an affiliate Caesars acquisition. And it's streamlined Caesars capital structure it's going to create a gaming giant with a market cap of over three billion dollars. And also at about one point seven billion in cash on its balance sheet. And that part is very important because users operating unit he needs to restructure its debt. And seated face to putting cash to support that restructurings of this merger is a good move forward for Steelers entertainment. How much was at about how caesar's. And its ability to handle its debt load. That was a huge part of that. You know Caesars Entertainment has been struggling with its Atlantic Iverson's two private equity firms bought the company in 2008 for about thirty billion dollars. And a lot of that debt now lives at the operating unit eighteen billion dollars at Caesars operating company. And the company plans to file for Chapter Eleven bankruptcy in mid January to deal what that debt issue. And Caesars Entertainment will be in a stronger position to support its operating unit through the restructuring. Due to this merger or. Is this a bullish deal by investors. So investor is I think we're excited about this deal seems there's an AT and bastards are excited because it's all good news for them. Jesus acquisition brings an attractive properties and to online gaming business. And that the company will be bigger and stronger combined snapped a little bit more complicated for Caesars acquisition shareholders. Sources were telling me that a lot of people we're bullish on Caesars acquisition. The kinds it is a separate company from Caesars Entertainment and that problems it has and all of the data operating company. And it don't some of the more growth oriented assets. So obviously this merger we'll change that but the deal was structured in a way that was attractive for Caesars acquisition shareholders. And that's why that stock is up today to Caesars had hit our times as of late it's mostly due to the downturn in the states and struggles gain a foothold in China and the cow right. Yes yes there has been a downturn in the US gaming market and fortunately for Teamsters it has some attractive properties and a Las Vegas market. But to still doing well. It's the rest of the country that's the problem you know for example Atlantic City has been hit really hard and Caesars closed one of its casinos showboat there. And has states have increased their gaming capacity and added more and mark casinos the competition the US is very intense. And unlike some of its competitors Caesars has not succeeded in gaining a foothold in China. And so it combined that with a heavy debt load and you have problems. All right Lisa Allen from the deal thanks for joining us. Thank you and you've been watching stories stocks David abcnews.com. For your latest headlines on Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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