Tilman Fertitta, the billionaire from Houston, has made headlines with his move to take Caesars Entertainment private. However, with the deadline for the go-shop period looming on July 11, another billionaire, Carl Icahn, is reportedly considering a last-minute bid for the troubled gaming company.
According to a report on Tuesday from Bloomberg, investment bank Jefferies Financial has started assessing interest in a $5 billion debt financing deal to support a $33-per-share offer, which would surpass Fertitta's bid of $31 per share, while also facilitating a private takeover of Caesars. Fertitta's all-cash proposal amounts to approximately $17.6 billion, which includes $5.7 billion in equity and around $12 billion in assumed debt.
Icahn's proposed bid could be described as a liability management exercise, or LME, a strategy often undertaken by companies to restructure their debt and evade bankruptcy. These maneuvers have garnered controversy, particularly in today's environment of elevated interest rates. Despite an uptick in trading volume on Tuesday, shares of Caesars remained largely steady at around $30.
On Wednesday, CNBC's David Faber expressed skepticism regarding Icahn's prospects of convincing the Caesars board at this late stage. "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 favor the Tilman deal. There is firm financing there," he stated. He also highlighted that the debt package is closely tied to the current management, implying that any change in leadership could complicate refinancing.
While Icahn's interest appears to be sincere, the limited timeframe poses significant challenges, compounded by his previous connections with Caesars. Icahn progressively acquired a controlling stake in Caesars from 2019 and led its acquisition by Eldorado Resorts in 2020, subsequently cashing out his shares. The current management, including the Carano family and CEO Tom Reeg, emerged from Eldorado.
This past journey has been tough on Caesars shareholders; the stock has plummeted nearly 70% over the last five years and fell below $20 in February before rebounding to around $29 amid takeover discussions. It remains uncertain whether investors would be enthusiastic about another takeover attempt led by Icahn.
Nevertheless, Icahn's influence is expected to be felt. The 90-year-old billionaire initiated acquiring a new stake in Caesars in early 2025, which included appointing two directors from Icahn Enterprises: CFO Ted Papapostolou and general counsel Jesse Lynn. At that moment, the potential spin-off of Caesars' digital operations was viewed as a key factor prompting Icahn’s return, and the company showed openness to discussions on the matter.
Reeg expressed a willingness to collaborate with Icahn: "He wants to be involved in the conversation and I welcome him to join us,” he remarked at last year’s East Coast Gaming Congress.
In a development announced Wednesday, Caesars revealed its board will decrease from 11 to 10 members. This change could potentially impair Icahn's negotiating power, as board member Courtney Mather, who has been with Caesars since 2019 and was previously a managing director at Icahn Enterprises, will resign effective July 6. According to the SEC filing, this resignation was not due to any disagreement with Caesars.
While Icahn seeks to mobilize his bid, Fertitta's plans are moving forward. This week, two executives from Fertitta Entertainment are set to appear before the Nevada Gaming Control Board for suitability hearings. Richard Liem, the CFO, and Steven Scheinthal, Fertitta’s senior vice president and legal advisor, will undergo these evaluations.
These hearings mark the beginning of what may be a lengthy regulatory review if Fertitta’s acquisition is approved. Fertitta currently owns Golden Nugget Casinos, competing directly with Caesars across various U.S. jurisdictions, including two locations in Nevada—Laughlin and Lake Tahoe. Similar antitrust issues arose when Eldorado acquired Caesars, which resulted in federal and state regulators mandating divestments to finalize that deal, a scenario that may recur under Fertitta.
The Nevada Gaming Control Board has refrained from commenting on the Fertitta acquisition but confirmed it will await a federal ruling before making any state-level decisions.
As of Wednesday, Caesars shares closed at $29.82, reflecting a slight decline. The stock was valued around $28 prior to the May 28 announcement that the company intended to enter into an agreement with Fertitta for acquisition.
