Fertitta Entertainment has been in talks of acquiring Caesars Entertainment, offering $17.6 billion. According to experts at American multinational investment bank Stifel, it is unlikely that another higher price will be offered.
New Offers Are Unlikely, Stifel Argues
In a report to clients, Stifel analyst Steven Wieczynski said the likelihood of a competing acquisition proposal for the Harrah’s operator remains low. The analyst said Stifel continues to expect Fertitta Entertainment’s $31-per-share acquisition of Caesars to proceed as planned, noting that there is little evidence to suggest a higher bid will emerge.
The Stifel analyst stated that, with several major shareholders, including the Carano family, which owns approximately 5% of Caesars, backing the transaction, the prospects for a competing offer appear slim. As a result, Stifel believes the most likely outcome is that the acquisition will proceed at the proposed $31-per-share price.
Caesars reported second-quarter earnings after the close of US markets earlier this week, although the company appeared to offer limited commentary on Fertitta’s takeover proposal. The go-shop period, during which Caesars was permitted to solicit alternative offers, expired on July 11. Since then, neither Caesars nor Fertitta Entertainment has provided any meaningful public updates on the transaction.
Stifel Downgraded Caesar’s Stock Last Month
Stifel locked-in its prediction for Fertitta’s offer last month, although it viewed the bid as conservative. Even back then, Stifel said support from major shareholders, combined with the absence of likely competing bidders, makes a materially higher offer unlikely. With Caesars shares trading near the proposed $31-per-share acquisition price, the firm believed the stock’s risk-reward profile had become more balanced. More than a month later, Stifel’s prediction seems even more set in concrete.
The bank also cautioned that the acquisition could take 12 to 18 months to complete due to the extensive gaming regulatory approval process. Currently, Fertitta’s bid on Caesars is under a multistate regulatory review, which could potentially slow down the acquisition process. The firm also warned that if the transaction were to fall through, Caesars’ shares could retreat to their pre-speculation levels in the low-$20 range, representing significant downside risk for investors.
Stifel continues to view Caesars’ long-term fundamentals favorably. The bank pointed to strengthening trends on the Las Vegas Strip, continued expansion of its digital business, and resilient demand across regional gaming markets as positives for Caesar’s stability. But even those strengths have been impacted by the pending acquisition and the stock’s limited upside from current trading levels, Stifel warned.
Ultimately, time will tell for certain if a new buyer will come to challenge Fertitta’s offer. Until that happens, Fertitta hopes for a Caesars integration before 2027, a prospect that seems possible after Stifel’s analysis, but one that also has to contend with ongoing regulatory hurdles, which might slow down the acquisition process.