It’s been almost a year since casino operators Dreams and Enjoy began seriously discussing a merger of their companies. They’re already Latin American powerhouses separately, which is why they’re still finding it difficult to convince regulators that combining their forces is in the best interest of consumers.
The National Economic Prosecutor (FNE, for its Spanish acronym) of Chile, where both companies are present, laid out several contingencies before it would sign off on the merger. One was that they would have to give up at least one of their gaming properties.
The companies had already offered the sale of an Enjoy casino. But the agency requested more details on how this sale would take place. Dreams and Enjoy proposed to dispose of the asset in nine months, but that completion of the sale rests with Chile’s gaming regulator. As a result, the process is moving slowly.
No Real Progress
The companies announced the merger last March, and by July, the FNE wasn’t any closer to greenlighting it. Then, at the end of November, the case resumed. The nine-month window is closing, but there are still 19 days left before the investigation period ends that the regulator has to beat.
In accordance with Chilean regulations, the FNE has up to 120 days to complete its review. The first 30 are given in the first stage of analysis that has already passed, and the remaining 90 are in a second phase, currently underway.
This second period, however, comes to a halt each time the parties present mitigations. This occurred in mid-December, when the casino operators addressed the potential sale of the Enjoy Santiago casino, also known as Rinconada, in Los Andes.
Last week, they deepened that analysis with a second list of mitigations. Now, Dreams and Enjoy have to present more documentation at the request of the FNE, which wants a precise explanation of how the companies plan to carry out the sales process.
In the first list of proposals, they finally offered to sell the property to generate more competition. They promised that they would create the conditions that would keep the asset attractive to a buyer. However, the FNE demanded more.
Sources familiar with the process confirm that the FNE asked them to shed a brighter light on what they would do. The companies need to make the regulator happy without giving up their biggest moneymakers.
FNE Won’t Budge
The antitrust body has placed special emphasis on the operations that both parties have around the Metropolitan Region. Existing legislation prohibits gambling halls from operating in the capital. The closest properties are the casino that Enjoy has in Rinconada on the southern border and Dreams’ Monticello on the northern edge.
In a previous analysis, the FNE pointed out that Rinconada is just 66 kilometers (40.2 miles) from the capital city of Santiago. Monticello Dreams is only 58 kilometers (34.8 miles) away. The agency has stated that both belonging to the post-merger company creates a risk to open competition.
Both Dreams and Enjoy know that this is the main obstacle to advancing their plan. In fact, in the beginning, they suggested the possibility of selling off Rinconada. Monticello is their main asset, the most important casino in Chile, so they don’t want to get rid of it. However, they aren’t providing enough details on how they would sell Rinconada to appease the FNE.
The merger between the two aims to create a holding company called Dreams Enjoy S.A. The Fischer group, partners in Dreams, would control 64%, while Enjoy shareholders would control the rest. They will have around 60% of the country’s licenses and close to 76% of the income. Unless they’re willing to compromise, the FNE will continue to place barriers in front of them.
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