Why Caesars Entertainment Corp.'s Shares Jumped 16% Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: The shuffling of Caesars Entertainment's assets continued today after it agreed to acquire subsidiary Caesars Acquisition in an all-stock deal.The market loved the move, sending the two stocks up by16% and 7%, respectively.

So what: Caesars Acquisition shareholders are being offered 0.664 shares of Caesars Entertainment,and the companies will be combined in preparation of a bankruptcy filing early next year. The move is being done, in part, because bondholders have sued Caesars Entertainment, saying the spinoff of "good" assets into Caesars Acquisitionviolated their rights as debt holders.

Caesars Acquisition went public just over a year ago in a spinoff offered to Caesars Entertainment shareholders for $8.64 per share in the new company. Now that the companies are being combined again, the full transaction has amounted to little more than a $1.17 billion share offering, albeit in a convoluted manner.

Now what: I think the combination is good for the bankruptcy process, but I wouldn't want to own either stock. We have no idea what, if anything, shareholders will own in the new companies following bankruptcy, and only a small percentage of debt holders have agreed to a prepackaged bankruptcy.

Betting on Caesars Entertainment is nothing more than gambling right now, and I don't think the odds of winning over the long term are very high at all.

The article Why Caesars Entertainment Corp.'s Shares Jumped 16% Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool is short Caesars Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.