Shares of Caesars Entertainment fell midweek as investors considered the possibility of a rival takeover offer that would complicate a deal already struck with Tilman Fertitta.
Caesars Edges Lower as Carl Icahn’s Takeover Attempt Faces Obstacles
Shares of the casino operator declined on Wednesday after a slight gain in the previous session. The withdrawal comes amidst renewed focus on billionaire investor Carl Icahn, who is reportedly considering a late-stage bid that could top the current offer on the table. However, while the potential valuation could be higher, the market sentiment is that there are major hurdles to any rival bid, reported The Las Vegas Sun.
Fertitta, a Houston businessman with significant interests in gaming and hospitality, announced in late May he had reached a deal to purchase Caesars in a deal valued at about $17.6 billion, including debt. His $31-a-share offer is supported by committed financing, which many believe strengthens its position with the company’s board.
Icahn is said to be working on a competing proposal of about $33 a share, with speculation the number could go higher. However, the outlines of his potential bid are more complicated, with efforts to line up billions of dollars in debt financing and perhaps reshuffle pieces of Caesars’ asset base. Such a strategy might require cooperation from creditors, which adds another layer of difficulty at a later stage.
Board Support and Timing Pressures Weigh on Icahn’s Caesars Bid
Reports have also said that Jefferies, the investment bank, has been sounding out investors on whether they would fund a potential bid from Icahn. Yet, time is becoming an increasingly critical factor. Caesars’ “go-shop” period, in which it can consider alternative offers, expires this weekend, leaving little time for negotiations or due diligence on a competing transaction.
The board is still leaning toward Fertitta’s proposal, with its more transparent financing structure and lower execution risks, market watchers said. Analysts say any alternative would have to be as certain to get done and at a better price than the current one. That could be hard given the intricacies of Icahn’s approach.
Still, it is worth noting that Icahn is involved. The veteran activist investor has a long history with Caesars, including being instrumental in shaping the company’s current form through earlier deals. He also owns a stake in the business and has representation on the board, which means his voice cannot be easily dismissed.
Meanwhile, already in the works are regulatory preparations for Fertitta’s purchase, with some of the key executives beginning the licensing process required for approval in Nevada. The development adds to the impetus in the existing deal.