Activist investor Carl Icahn and the Board of Caesars Entertainment Corp. might be at odds over the price at which the casino operator should be sold to rival Eldorado Resorts, sources familiar with the ongoing discussions have told The New York Post.
According to those sources, Mr. Icahn, who is currently Caesars’ largest shareholder with a 28.5% stake in the company, thinks the company’s board demands too much for the casino operator in its ongoing combination talks with Eldorado.
Earlier this year, Caesars began its search for a buyer who was willing to pay $13 per share for the company. Eldorado was understood to have made a $10.50 per share offer, which the board unanimously dismissed as too low. Sources said that Mr. Icahn agreed Eldorado’s bid was too low. However, it is believed that the New York investor is now willing to accept less than what Caesars’ board is seeking from a potential buyer.
Mr. Icahn, who built his stack in one of the world’s largest gaming and hospitality companies within the span of several weeks, has been pressing Caesars to sell itself or merge with another business as he considers a move of this kind is the best path forward.
How Much Is Eldorado Ready to Offer?
Caesars and Eldorado first entered merger talks in March. The Las Vegas gaming giant provided its potential buyer with access to key financial data that the latter would need for due diligence.
Eldorado has stated that it does not feel comfortable with debt levels that exceed 5.5 times the merged enterprise’s Ebitdar. Caesars’ mountain of net debt currently amounts to more than $18 billion. According to investment bank Jefferies, Eldorado is likely to make an offer of $12 a share. A price of $11.50 a share for Caesars would mean that the combined business would carry debt equal to 5.4 times its Ebitdar.
Sources believe Mr. Icahn might be willing to sell Caesars at a price close to $12 a share. However, the company’s board is reportedly trying to squeeze a better offer from Eldorado and to get a price that “is right for all shareholders.”
Being Caesars’ largest stakeholder, Mr. Icahn was able to appoint three members to the casino giant’s board. In addition, the businessman played an instrumental role in the recent appointment of Anthony Rodio as CEO of the gaming and hospitality operator. That paired with Mr. Icahn’s 28.5% stake could help the activist investor push a deal through, despite board members’ efforts to secure a higher price.
Eldorado announced on Monday that it was selling three of its casinos for $385 million. Fellow casino operator Century Casinos would acquire the operating assets of Mountaineer Casino Racetrack and Resort in New Cumberland, West Virginia; Isle Casino Cape Girardeau in Cape Girardeau, Missouri; and Lady Luck Casino Caruthersville in Caruthersville, Missouri for $107 million, while VICI Properties, Caesars’ REIT spin-off, will buy the land and real estate assets of the properties for $278 million.
Suggestions surfaced that Eldorado could use the money from the sale to finance the purchase of Caesars.
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