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LAS VEGAS (AP) — Billionaire investor Carl Icahn on Tuesday disclosed he has taken a 10% stake in Caesars Entertainment and is pushing the casino giant to sell itself.
The activist investor said in a filing with the Securities and Exchange Commission that he wants representation on Caesars’ board and for the company to refrain from immediately appointing a new CEO.
Caesars’ stock is undervalued and the best way to boost it would be to sell the company, Icahn’s filing states. Shares of the Las Vegas-based company jumped more than 5% Tuesday.
“We believe that our brand of activism is well suited to the situation at Caesars, which requires new thought, new leadership and new strategies,” the filing adds.
Icahn intends to continue talks with Caesar’s board of directors and management, and if necessary, he may nominate a slate of directors at the company’s annual shareholders meeting, according to the filing. He also wants CEO Mark Frissora out.
Frissora, who joined Caesars in 2015 and guided it through bankruptcy reorganization, was scheduled to leave his role Feb. 8, but his departure was pushed back to the end of April. Icahn does not want Frissora’s tenure to be extended again, according to the filing, and expects the company to not appoint a new leader until after he and the board have engaged “meaningfully.”
Caesars emerged from an $18 billion bankruptcy in late 2017. Icahn’s move comes after the casino operator was approached by at least two companies.
Caesars in November confirmed that it had received a proposal from casino operator Golden Nugget LLC, owned by Houston billionaire Tilman Fertitta. The proposal called for Caesars to “acquire substantially all of Golden Nugget’s restaurant, hospitality, entertainment and gaming businesses in exchange for a significant minority of Caesars’ common shares.”
Caesars at the time said its board rejected the proposal, but “continues to be open to reasonable alternatives to enhance long-term shareholder value.”
The Wall Street Journal last week reported an official with Eldorado Resorts Inc. also “made a preliminary approach” over the past several months.
Caesars did not immediately respond to a request for comment on the filing. It is scheduled to report its fourth-quarter results Thursday. Its stock ended up 47 cents to $9.62 on Tuesday and is up almost 42% so far this year. But it’s still down 27% in the past 12 months.
Analysts at J.P. Morgan in a note to investors said they do not see an obvious suitor that could or would take Caesars’ entire portfolio of assets, including the nine properties on the Las Vegas Strip. They pointed to MGM Resorts International as the “most obvious potential acquirer,” but said that company has been clear about giving priority to its current projects.
Alex Bumazhny, gambling analyst with Fitch Ratings, told the Associated Press that Icahn “has a good track record” in the gambling sector.
“When news breaks of (a merger and acquisition) transaction, the target’s stock will gravitate towards the premium price being offered by the acquirer,” he said. “Seeing that Caesars has potential suitors, it’s possible Icahn is simply banking he could push Caesars to accept an offer and bank the (merger and acquisition) premium.”
Icahn last year sold his Tropicana Entertainment casino company for $1.85 billion.
David Katz, equity analyst at Jefferies, said there are things Caesars could do to capture a better value for its stock that do not involve selling itself, including sharing expectations more effectively. He said Caesars’ “value story” has not been told effectively since the company emerged from bankruptcy.
“That story is about the brand and the loyalty program that they have,” he said. “We know that that brand has value because when you visit their properties, whether or not they are the nicest, they are consistently the busiest, and that’s because of the loyalty program they have.”
Source: travelweekly.com
 -- Billionaire investor Carl Icahn on Tuesday disclosed he has taken a 10% stake in Caesars Entertainment and is pushing the casino giant to sell itself. The activist investor said in a filing with the Securities and… "Pin It")
My husband has been a Diamond member at Harrah’s Council Bluffs on and off for over 15 years and they have devalued it significantly over the past 4. It started off with not being able to access the front half of the Diamond Lounge on concert nights. They literally put up a velvet rope that only 7 Stars could cross, even though they had exclusive access to a huge balcony and event space where the nightclub used to be. Now, they’re to the point that he can’t even access the Diamond Lounge more than once per month. No room comps on weekends now, just Sunday-Thursday. One $100 food comp every six months. We’ll see if they still give occasional concert tickets away. We actually stayed at the Venetian last year instead of a Caesar’s property and were completely WOWed by their rooms. We hit Diamond again at the Paris Hotel and their reaction was underwhelming at best. I understand that the company has just come out of bankruptcy, but cutting benefits for upper tiers of their famed loyalty program isn’t a great way to go about it. What’s the use in earning Diamond if the benefits are gone? I hope Icahn is listening to what their upper tier members have to say.