Carl Icahn building a stake in Caesars makes a purchase deal much more affordable for any suitor of the company
Texas billionaire Tilman Fertitta is planning to make a fresh new offer to acquire Caesars Entertainment Corp., and his bid might be boosted by the company’s controlling stakeholder, Carl Icahn, the New York Post reported earlier this week citing information from unnamed sources.
Mr. Fertitta is the owner of the Houston Rockets, the Golden Nugget Casino chain, and the Landry’s dining and hospitality corporation. The businessman approached Caesars last fall with a takeover offer that would have seen the combination of the Las Vegas casino and hospitality powerhouse with Mr.
Fertitta’s smaller casino business. Caesars declined the offer, deterred by the fact that a transaction would have ballooned its debt, which stood at around $9 billion at the time.
Mr. Fertitta has reportedly been looking for cash partners to shore up his bid over the past several months. Bloomberg reported last month that the businessman has bought 4 million shares of Caesars, which represented less than 1% of the company’s overall stock.
Sources told the New York Post that while Mr. Fertitta has not found cash partners, he is gearing up to make a new offer for the hotel and casino operator. According to people familiar with the ongoing developments, the businessman’s bid to buy Caesars could get help from the fact that the company’s largest shareholder – New York billionaire investor Carl Icahn – is pressing for sale, while amassing a whopping stake.
Mr. Icahn begun buying Caesars stock earlier this year to build a 28.5% stake and become the company’s largest shareholder. In addition, the businessman has secured representation on the company’s board after it agreed to appoint three new directors named by Mr.
The billionaire investor will be entitled to a fourth board seat if Caesars fails to replace its outgoing CEO Mark Frissora by mid-April.
With Mr. Icahn owning a 28.5% stake in the company, any interested buyer would only need to purchase the remaining 71.5%, which makes the deal much more affordable for Mr. Fertitta than it would have been last fall, if Caesars had not declined it.
News emerged earlier this week that Caesars and fellow casino operator Eldorado Resorts were in the early stages of merger talks. According to sources, Caesars has given Eldorado access to certain financial data so that the latter can decide whether to make an offer.
Mr. Icahn has said that a merger or sale is the best path forward for Caesars and has urged the company to explore available opportunities. In addition, the businessman wants a person with experience in the gambling industry to take over as CEO and help the Las Vegas casino giant trim corporate and other costs.
The New York activist investor is also reported to be pressing Caesars to focus on its domestic business instead of expanding into Asia. The company recently launched two non-gambling resorts in Dubai and is planning to bid for a casino license in Japan.
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