Casino Operators Enjoy and Dreams Halt Merger Following Collusion Accusations

It was likely never to make it all the way to the end, but the planned merger between Chilean casino operators Enjoy and Dreams is officially dead. The recent report that they may have colluded to rig a recent tender proved too big an obstacle to overcome.

A view of the exterior of Chilean casino operator Enjoy's casino in Antofagasta
The exterior of Chilean casino operator Enjoy’s casino in Antofagasta. The operator has called off a planned merger with Dreams. (Image: La Tercera)

The companies first announced the merger at the beginning of 2022 and still didn’t have the approval of the regulators. The National Economic Prosecutor (FNE, for its Spanish acronym) is responsible for gauging the outcome of business deals and was concerned the merger might create an anti-competitive market.

Reports surfaced at the beginning of the month that accused Dreams and Enjoy, along with other companies, of holding secret negotiations to sway a tender offer a few years ago. After the revelation, the FNE announced an investigation, and the operators knew they stood no chance of receiving approval for the merger.

Back To Square One

The negotiations were to give Dreams’ owners 64% of the shares of the combined entity. The current shareholders of Enjoy, which was coming out of a restructuring process a year ago, would control the remaining 36%.

But all the talk and grandiose attempts to sell the merger publicly have reached a dead end. Dreams and Enjoy announced Tuesday that the agreement was off, confirming that it failed because of too much pressure and the current investigation.

The deal required a series of approvals, with that of the FNE being one of the most important. Every time Dreams and Enjoy responded to its various concerns, the agency came back with new ones. The FNE believed the new company would be too big and wanted the operators to figure out how to reduce their footprint.

In fact, the companies had recently presented their fifth mitigation proposal, presenting two main conditions. One was the divestiture of Enjoy’s casino in Rinconada and the other was a guarantee to maintain the benefits of the loyalty packages of both companies.

Prior to the collusion scandal, Enjoy and Dreams were apparently working on a plan to fulfill both. Enjoy acknowledged in its statement about the merger cancellation that they would have met the conditions this July.

The Storm Isn’t Over Yet

The FNE continues to investigate the two companies following testimony by a former manager of a third casino company, Marina del Sol. That testimony alleged collusion between industry players in the latest casino tender.

The government agency has carried out raids in conjunction with the investigation. They searched the homes of the president of Marina del Sol, Nicolás Imschenetzky, the president of Enjoy, Henry Comber, the general manager of Dreams, Jaime Wilhelm, and the now-former manager of the Chilean Association of Casinos, Rodrigo Guíñez. They seized phones, computers and electronic devices that could serve as evidence to demonstrate alleged coordination in casino tenders.

Enjoy tried to save face after the merger failed, issuing a statement in which it indicated that it will now focus “on a new stage of development.” This will include “generating new experiences for customers” and consolidating its operations.

Enjoy’s shareholders haven’t responded well to the failed merger of the company’s recovery plans. Company shares dropped 13.04% drop on the Santiago Stock Exchange on Wednesday, which had been preceded by a 7% decline on Tuesday.

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