This week, executives from Fertitta Entertainment shared new details about the company's acquisition of Caesars Entertainment during a preliminary licensing meeting with the Nevada Gaming Control Board. CFO Richard Liem and General Counsel Steven Scheinthal received unanimous approval from the board on Wednesday, with plans to seek final consideration from the Nevada Gaming Commission on July 23.
Both Liem and Scheinthal have longstanding ties to billionaire Tilman Fertitta, who is currently serving as the U.S. ambassador to Italy and San Marino. Scheinthal has been affiliated with Fertitta since 1988, while Liem joined the team in 1999. They assured the board that Fertitta is not involved in daily operations, with them and Fertitta’s wife, Paige Fertitta, acting as the company’s board during his absence.
Liem and Scheinthal are well-versed in Nevada’s gaming industry, holding licenses since 2005 when Fertitta acquired the Golden Nugget Casinos. Their last appearance before the board occurred in 2023 when Golden Nugget took over the former Hard Rock Lake Tahoe.
During the meeting, while the transaction details were discussed, board members focused first on compliance issues. Caesars faced a $7.8 million fine last year for anti-money laundering violations involving illegal bookmaker Mathew Bowyer, who has since been banned from all Nevada casinos. Scheinthal emphasized that Fertitta and Golden Nugget have consistently maintained integrity, stating, "We understand the importance of compliance… Everybody knows what the repercussions are in connection with not following the rules and regulations."
Regarding the Caesars deal, Scheinthal outlined the various challenges ahead for the transaction, which is anticipated to take over a year to complete. The all-cash acquisition amounts to $17.6 billion, comprised of $5.7 billion in equity and $11.9 billion in assumed debt.
The immediate priorities include filing antitrust documentation and securing gaming license approvals in all of Caesars' jurisdictions. Scheinthal noted that Fertitta will submit a Hart-Scott-Rodino antitrust application to the Federal Trade Commission by July 13, entering a 30-day waiting period. The application process is divided, with initial submissions expected to be finalized this week and a further 45-day window for subsequent filings. He estimates that full approval could take around nine to ten months.
As a public company, Caesars must file a proxy statement and secure shareholder approval. Following its annual meeting on June 9, Caesars will announce its second-quarter results on July 28, without a subsequent call with analysts.
Additionally, financing remains a significant consideration. Scheinthal stated that although Fertitta has a commitment letter from a group of banks to finance the acquisition, the company hopes to secure better terms in the current marketplace. This approach carries risks as the Federal Reserve has held interest rates steady amidst ongoing inflation challenges and economic impacts from the U.S.-Iran conflict. Scheinthal voiced optimism, stating, "Our hope is that in the next few months there will be a window of opportunity where the market will be hotter and [it’s] a more interest rate friendly environment where we can go raise the money and then just put it in an escrow account."
The Caesars transaction includes a go-shop period that ends on July 11. Carl Icahn, known for leading a previous acquisition of Caesars by Eldorado Resorts, is reportedly attempting to formulate a competing bid. His proposed offer of $33 per share, as reported by Bloomberg, exceeds the $31-per-share agreement Caesars has with Fertitta. Icahn continues to hold two of the company's ten board seats while vying for a $5 billion debt financing package.
Nonetheless, the Caesars board appears to favor the Fertitta deal due to its solid financing, according to CNBC. Scheinthal confirmed, "When we have the money, we get HSR clearance, shareholder approval, approval for all the various gaming jurisdictions, then we’ll be in a position to close the transaction."
Board members also expressed interest in Fertitta's 12% stake in rival Wynn Resorts. Despite Wynn's stock dropping over 19% this year and facing delays in its UAE resort plans, Scheinthal responded to inquiries about selling the stake with surprise, asserting, "No reason to believe there are any regulatory issues with passive ownership. We’re a passive investor in Wynn, and we like owning the Wynn stock, and so it’s our desire to keep owning the Wynn stock."
