Carl Icahn Becomes Biggest Shareholder in Caesars

Caesars Palace in Las Vegas
Carl Icahn now has a 17.75% stake in the company and could force a sale of the company.

30-second summary

  • Carl Icahn is a successful billionaire investor who now is the biggest Caesars shareholder
  • His 17.75% ownership and control of three of the twelve board positions puts him in a strong position
  • It is likely that the company will shortly be put up for sale

Details of this purchase

Carl Icahn is an American billionaire who is well-known for being one of the best investors on Wall Street. He has shown a strong interest in casino company Caesars Entertainment recently.

In February, he bought a 10% stake in the company. He has been acquiring more stock and is now the biggest shareholder in Caesars Entertainment. It looks likely that the company will soon be for sale.

According to his disclosure to the Securities and Exchange Commission (SEC) in the United States, the billionaire now holds a 17.75% stake in the company. Companies controlled by Icahn bought an additional 15m shares over the previous weekend at $8.45 per share for a total of $126.7m (£96.5m).

This comes soon after Icahn was given the power to choose two new company directors. There are now three Icahn appointments among the 12 members of the board.

Icahn must now get a license for gaming in Nevada, the company’s home state, because he now owns a stake of over 10%. He has received a gaming license in the past through other investments and it seems highly likely that he will get approval for a license this time around.

Company up for sale?

There has been talk for many months about Caesars Entertainment going up for sale. Many believe that the best way forward for the company is to get new ownership. Icahn, by increasing his shares in the company, is clearly trying to accelerate this process.

Icahn recently said, “The best path forward for Caesars requires a strategic process to sell or merge the company.” 

Two other owners of the company are Apollo Global Management and TPG Capital, both private equity companies. They agree with Icahn on his stance that the company should be sold. Together, they hold nearly 47 million shares.

Other casino moguls have offered to join forces in the past. The owner of the Golden Nugget Casinos, Tillman Fertitta, discussed merging with Caesars last year. However, this was not acceptable to Caesars. With Icahn’s increased interest, this might be looked at again.

Ultimately, because Icahn holds such a large stake and controls a third of the board, he will wield a lot of influence over the sale of the company. He is looking for a new CEO who has significant experience in the gaming industry as a CEO. The current CEO, Mark Frissora, will step down from the position in April.

History of Caesars Entertainment

The company was originally founded in 1937 and has changed its name over the years. It owns and operates more than 50 hotels and casinos, along with golf courses, through a variety of brands. It is one of the biggest gaming companies in the world.

In 2005, Harrah’s bought Caesars for $10.4bn (£7.9bn). TPG and Apollo led a leveraged buyout of Harrah’s in 2006 for more than $31bn (£23.6bn), which was a premium of 31%.

The name change from Harrah’s Entertainment to Caesars Entertainment came in November 2010, shortly after plans to hold an IPO were changed. Instead, the IPO took place in February 2012. The reason for the name change was the international recognition of the Caesar’s Entertainment name.

The company’s biggest operating unit had to file for bankruptcy protection in January 2015. This was due to debt levels of more than $18bn (£13.7bn) and decreasing numbers of visitors.

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