According to reports, the Caesars Entertainment empire will be put up for sale in the next week or so, with two possible buyers named.
Sale rumours start circulating
Talk of a potential sale of Caesars Entertainment began to do the rounds when news that Carl Icahn was buying up major stakes in the company went public. He is one of the most prominent investors on Wall Street and has a history of investing in gaming companies.
His interest in Caesars began to take off in February, when he purchased a 10% stake. As the weeks passed, he purchased more and more stock. He now owns more than 28% of the company.
Icahn now effectively has control over three positions on the board. This is especially important as the selection of a new CEO is imminent.
Icahn has put a deadline in place of April 15 for the hiring of a new CEO that has his approval. If this deadline is not met, then Icahn will appoint another board member. The current CEO Mark Frissora finishes in the role on April 30.
Some parties are not happy with Icahn’s interest in the company. This includes the Local 54 branch of the Unite Here trade union. Local 54 represents casino workers union in New Jersey. They have clashed with Icahn in the past over an Atlantic City casino.
Shares of the company were down about 15% year on year before Icahn’s interest became public. Since January, the share price has risen by 36%. This gives Caesars Entertainment a market value of about $6.2bn. In total, the value of the company is around the $24bn mark.
While there has been no official decision to put the company up for sale, experts believe that it is only a matter of time. According to reports, it looks like there are two main potential buyers. They have been named as Eldorado Resorts and Tilman Fertitta.
Fertitta is a billionaire who currently owns the Golden Nugget Casino franchise, as well as the Houston Rockets NBA team. Apparently, Fertitta was given the chance to conduct due diligence on the potential deal.
He previously made an effort in 2018 to hold merger talks between his company and Caesars, but to no avail. He still appears to be keen on making another bid for the company.
According to reports in March, Eldorado Resorts was also showing interest in a potential merger. This company has 26 different gaming properties across the US. It is also merging with Tropicana Entertainment.
One of the main aims of Icahn and the board is to slash the company’s hefty corporate costs. They are cutting down on the number of corporate employees, in a bid to reduce yearly expenses. This move could cut costs by almost $40m.
Changing owners and hands
Caesars Entertainment has a long and winding history when it comes to its ownership. The company was founded in 1937 and has changed names many times since then.
Globally, more than 50 hotels and casinos are under Caesars’ ownership. The portfolio encompasses numerous different brands, making the company one of the largest gaming corporations in the world.
Harrah’s bought Caesars in 2005 for about $10.4bn. TPG Capital and Apollo Global Management madea leveraged buyout in 2006. This cost about $31bn, which saw them pay a premium of about 31% on the market price.
In November 2010, the company’s name changed from Harrah’s Entertainment to Caesars Entertainment. While the initial public offering (IPO) was originally to take place in early 2011, it was moved to February 2012.
The reason for the name change to Caesars Entertainment was down to its recognition across the world as a respectable gaming brand.
In January 2015, the largest operating unit of the company had to seek bankruptcy protection. This was because its debt level had risen to more than $18bn, as well as falling visitor numbers.