Corporate raider Carl Icahn has increased his ownership stake in Caesars Entertainment to 15.53 percent, making the 83-year-old billionaire the casino company’s largest shareholder.
In a filing Friday morning with the Securities and Exchange Commission, Icahn disclosed the $330.883 million acquisition of 38.9 million additional shares of Caesars through in six transactions of between $8.50 and $8.55 that took place Thursday.
In subsequent SEC filings late Friday, Apollo Global Management LLC and TPG Capital, the two private equity giants that have controlled Caesars for a decade, sold 36.7 million shares in a direct sale to Icahn.
Icahn had previously controlled 9.8 percent of Caesars through $566 million in stock purchases in December and January now owns more than 105 million shares in Caesars.
The transaction solidifies Icahn’s control of Las Vegas-based Caesars, which operates nearly 40 casinos in 13 states and the World Series of Poker. Icahn, currently ranked No. 31 on the Forbes 400 with a net worth of $18 billion, said he wants Caesars to either be sold or merged with another gaming operator.
The chairwoman of the Nevada Gaming Control Board said Friday Icahn will have to come forward for licensing since his ownership stake in the company exceeded 10 percent, as spelled out by state gaming law.
“Anyone with 10 percent of any class of voting securities of a (publicly traded company) shall apply to the (Nevada Gaming) Commission for a finding of suitability,” Control Board Chairwoman Sandra Douglass Morgan said in an email.
Last week, Icahn and Caesars Entertainment management reached a deal in which Icahn representatives now control one-fourth of the company’s 12-person board of directors. Icahn also has nearly total say over who will be the company’s next chief executive. If Caesars doesn’t name a new CEO to Icahn’s liking in 45 days, he gets a fourth seat on the board.
Icahn Enterprises CEO Keith Cozza, Icahn Enterprises board member James Nelson, and Icahn Capital fund manager Courtney Mather joined the Caesars board a week ago, replacing John Boushy, Matthew Ferko, and Christopher Williams, according to an SEC filing.
Current Caesars CEO Mark Frissora announced plans last year to leave the position in February, but later agreed to remain through April when the search for a new CEO stalled. Frissora, a former CEO with Hertz, joined Caesars in July 2015 and led the company through its 30-month bankruptcy reorganization that shed $16 billion in debt and created the real estate investment trust VICI Properties.
Icahn said he wants someone with casino experience in the CEO’s office.
In a research note to investors Wednesday, Roth Capital Partners gaming analyst David Bain made a case for Reno-based regional gaming giant Eldorado Resorts to acquire Caesars. Eldorado was reportedly discussed a deal for casino company.
“We do not pretend to know if Eldorado and Caesars are in any deep merger discussions, though the universe of buyers is limited and Eldorado is best suited to extract full value from Caesars assets, in our view,” Bain told investors, He suggested a $12 per share buyout of Caesars, which would equate to a $9 billion deal.
“Outside of being one of a few potential candidates for Caesars, in our view, Eldorado has proven its ability to generate (cash flow) synergies to best maximize value,” Bain said. “Eldorado has little overlap with Caesars (another good fit), except in Atlantic City.”
Bain suggested $600 million in cost savings could be achieved through a merger.
Icahn has had investment success in the gaming industry. He sold Tropicana Entertainment’s seven casinos for $1.8 billion last year to a partnership between Eldorado Resorts and Gaming and Leisure Properties. A year earlier, he sold the unfinished Fontainebleau project on the Las Vegas Strip – which he acquired out of bankruptcy for $150 million – to a New York developer for $600 million.
Back in 2007, he sold the Stratosphere and several other casinos to Goldman Sachs’ Whitehall Street Real Estate Fund for $1.3 billion.
Shares of Caesars, traded on the Nasdaq, closed at $8.45 Friday, down 13 cents or 1.52 percent.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
