Icahn scrambling for last-minute Caesars bid but chances appear slim

Houston billionaire Tilman Fertitta’s take-private of Caesars Entertainment has been one of the biggest casino industry storylines this year, but before the deal’s go-shop window concludes on 11 July, fellow billionaire Carl Icahn is reportedly mulling a last-minute attempt for the beleaguered operator.

On Tuesday, Bloomberg reported that investment bank Jeffries Financial has been gauging interest in a $5 billion debt financing package for a $33-per-share deal that would trump Fertitta’s offer of $31 per share while also taking the company private. Fertitta’s all-cash deal, worth a total of $17.6 billion, includes $5.7 billion in equity and nearly $12 billion in assumed debt.

Icahn’s proposal is considered a complex liability management exercise, or LME. LMEs are traditionally executed by companies as an attempt to restructure debt and avoid bankruptcy, but are controversial and have become more popular in an environment with elevated interest rates. While the report triggered elevated trading volume on Tuesday, Caesars’ shares remained relatively unchanged around $30.

On Wednesday, CNBC’s David Faber seemed to throw cold water on Icahn’s chances in swaying the Caesars board this late in the game.

“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,” Faber said. “They favor 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.”

Icahn-affiliated director leaves Caesars board

Icahn’s interest is said to be genuine, but the lack of time for this window and the corporate raider’s previous history with Caesars are steep obstacles to clear. Icahn gradually built up a controlling stake in Caesars starting in 2019 and spearheaded the company’s acquisition by Eldorado Resorts in 2020 before cashing out his holdings. Caesars’ current management team, including the Carano family and CEO Tom Reeg, came from Eldorado.

In retrospect, the deal was devastating for Caesars shareholders. The stock is down nearly 70% in the last five years, and dropped below $20 in February before jumping to its current level of about $29 in response to all the takeover speculation. It remains to be seen whether investors have any appetite for a second Icahn-led takeover.

That said, Icahn’s presence will have to be felt to some degree. The 90-year-old billionaire started building another Caesars stake in early 2025, culminating in the appointment of two board directors from Icahn Enterprises — CFO Ted Papapostolou and general counsel Jesse Lynn. At that time, the potential spin-off of Caesars’ digital business was seen as the main catalyst for Icahn’s return, and the company was amenable to those conversations.

Icahn “wants to be involved in the conversation and I welcome him to join us,” Reeg told iGB at last year’s East Coast Gaming Congress. “We have a great relationship.”

On Wednesday, Caesars announced that its board was shrinking from 11 to 10, but the departure could hurt Icahn’s chances instead of help. Courtney Mather, chief investment officer at Vision One and a Caesars board member since 2019, announced his resignation effective 6 July. Mather previously served as a managing director for Icahn Enterprises from 2014-2020. The SEC filing announcing his departure says the resignation “is not the result of any disagreement” with Caesars.

Fertitta executives begin licensing this week

As Icahn scrambles to form his bid, Fertitta’s plan is already progressing. On Thursday, the first two executives from Fertitta Entertainment will go before the Nevada Gaming Control Board for suitability hearings. They are CFO Richard Liem and Steven Scheinthal, Fertitta’s senior vice president and “go-to lawyer”.

Their hearings represent the first step in what is likely to be a lengthy regulatory process, should the deal be confirmed. Fertitta currently owns Golden Nugget Casinos, which operates in several competing jurisdictions with Caesars around the US, including two in Nevada — Laughlin and Lake Tahoe. When Eldorado acquired Caesars, there were similar antitrust considerations. Both federal and state regulators required various divestments for that deal to close, which would likely happen again under the Fertitta acquisition.

The NGCB previously declined to comment to iGB about the Fertitta acquisition but confirmed that it would await a federal ruling before making any state-level determinations.

Caesars closed on Wednesday at $29.82 a share, down fractionally on the session. The company traded around $28 a share prior to a 28 May announcement by Caesars to enter into an agreement with Fertitta to be acquired.