Billionaire Tilman Fertitta's planned takeover of Caesars Entertainment has been a significant development in the casino sector this year. As the go-shop period for the deal approaches its close on July 11, another billionaire, Carl Icahn, is reportedly contemplating a last-minute bid for the troubled company, raising the prospect of a bidding war.
A Tuesday report from Bloomberg indicated that the investment bank Jefferies Financial has been sounding out investors regarding a $5 billion debt financing effort targeting a $33-per-share offer. This proposal would surpass Fertitta's existing offer of $31 per share and facilitate a private ownership model. Fertitta's all-cash bid, valued at $17.6 billion, comprises $5.7 billion in equity coupled with nearly $12 billion in assumed debt.
Icahn's strategy appears to involve a complex liability management exercise (LME), a method typically employed by firms seeking to reorganize their debt and stave off bankruptcy. These maneuvers have gained popularity amid rising interest rates but often come with significant risks. Following the news, trading activity for Caesars increased, yet shares remained steady around the $30 mark.
On Wednesday, CNBC’s David Faber suggested that Icahn's chances of influencing the Caesars board in this late stage are limited. "Will [Icahn] get to a finish line here that’s acceptable to the board of directors? From what I’m hearing, it’s a tough slog. They favour the Tilman deal. There is firm financing there. The debt package kind of travels with the management team, meaning if the management team were to leave, you would have to refinance a lot more debt," he stated.
Despite Icahn's genuine interest, the timeline and his tumultuous history with Caesars present significant challenges. Icahn initially acquired a controlling stake in Caesars in 2019 and played a pivotal role in the company’s acquisition by Eldorado Resorts in 2020 before selling his shares. Currently, Caesars' leadership team includes members from Eldorado, such as CEO Tom Reeg and the Carano family.
In hindsight, the Eldorado deal has proven detrimental for Caesars shareholders, with stock prices plummeting nearly 70% over five years, and even dipping below $20 in February. The stock has bounced back to around $29 amidst rumors of potential takeover bids, leaving investors to ponder whether they would support another Icahn-led initiative.
Icahn has been gradually re-establishing his stake in Caesars since early 2025, which included appointing two board members from Icahn Enterprises—CFO Ted Papapostolou and general counsel Jesse Lynn. Initially, conversations about spinning off Caesars' digital business seemed to attract Icahn's renewed involvement. Reeg previously welcomed Icahn's engagement, saying, "We have a great relationship."
On Wednesday, Caesars revealed that its board size would decrease from 11 to 10 members, a development that could potentially hinder Icahn's prospects. Board member Courtney Mather, who served on Caesars' board since 2019 and previously held a managing director position at Icahn Enterprises from 2014 to 2020, announced his resignation effective July 6. According to the SEC filing concerning this departure, it was not due to any disagreement with Caesars.
While Icahn scrambles to prepare his bid, Fertitta’s plans move forward. On Thursday, two executives from Fertitta Entertainment are set to appear before the Nevada Gaming Control Board for suitability hearings, including CFO Richard Liem and senior vice president Steven Scheinthal, who is also Fertitta's attorney.
This step marks the beginning of a potential lengthy regulatory review process if Fertitta’s deal is approved. Fertitta's holdings include several Golden Nugget Casinos that compete with Caesars in multiple markets, including Nevada. Previously, federal and state regulators imposed divestment conditions related to the Eldorado acquisition, and similar scrutiny is expected for the Fertitta deal.
There has been no comment from the Nevada Gaming Control Board regarding the Fertitta acquisition, but they confirmed they will await federal guidance before addressing state-level issues.
As of Wednesday, Caesars shares closed at $29.82, experiencing a slight decline. The stock was around $28 prior to the May 28 announcement of the Fertitta acquisition agreement.
