Carl Icahn increases his participation in Caesars and urges sale

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Lennart folder March 23, 2019

The New York billionaire Carl Icahn has increased his participation in the Casino and hotel operator Caesars Entertainment. At the same time, he increases the pressure on the company to sell himself or to strive for a merger. A possible partner would be Eldorado. There were initial talks last year, but failed. Now a possible merger becomes more likely.

Caesar’s entertainment writes red numbers and could come back to new strength through a merger.

Icahn holds a fifth of the shares in Caesars

According to Gurufocus reports, Carl Icahn increased its stock of Caesar’s entertainment stocks by more than 20 million in the second week of March. It includes 20.88 percent One of the world’s largest casino and hotel operators. Icahn’s interest in Caesars was already secured in January. Last month he confirmed the first figures: the participation was just under ten percent a month ago. In the following weeks he has secured another ten percent and can now further increase the pressure on the company.

In addition to the major participation in the casino company, Carl Icahn has also secured a board representative. At the beginning of March, Caesars approved his request, Three new members for the Board of Directors to appoint. Of course, the members are personally selected by Icahn.

In addition, the billionaire will also be able to appoint another fourth director if Caesars does not have a replacement for the departure within 45 days Bishergen CEO MARK FRISORRA finds. This was supposed to step down in February But can continue until April. Until then, a new CEO must be found. Icahn already has a favorite for this: the CEO of Affinity Gaming, Anthony Rodio.

Caesars again with massive financial problems

According to Icahn, it is important to install a CEO with considerable experience in the gambling industry. Exactly Anthony Rodio corresponds to this requirement profile. Internal sources confirm that Caesar’s entertainment will take the recommendation of Icahn into account. Nevertheless, the billionaire sees a further need for action and, due to the almost precarious situation a sale or a merger as ways out.

The company also shows that the Caesars faces major problems at the beginning of the week. the Staff is to be reducedto save a total of $ 40 million in costs. Some job cancellations are supposed to be vacant positions, all other concerned employees are offered a severance payment, the company said.

The company had to file for bankruptcy as early as 2015 because a debt mountain in the amount of around $ 23 billion could no longer be repaid. And even now it doesn’t look much better. In December 2019 The long-term liabilities of Caesar’s entertainment to around nine billion US dollars. Of course, the company’s properties are still on the habit side, but in the long run that will not be enough.

Good to know:

Caesar’s entertainment currently has and operates more than 50 properties in 14 states in the United States. There are also other hotels and casinos in five other countries around the world.

Sales or merger?

The difficult situation moves Icahn to push the company for a sale or merger. This is the best way for the company and the best way to create shareholder value. The fact that he is interested in the shareholder value is obvious with a participation of more than 20 percent. So far, it is still unclear whether there will be a sale or a merger.

However, Reuters recently reported, citing unnamed sources of fusion talks between Caesar’s entertainment and Eldorado Resorts in. However, an agreement is not yet in sight and Eldorado also has not yet binding offer. However, the first, albeit limited financial information from Caesars, are said to have been transmitted to Eldorado.

This means that the negotiations are still in the early stages, but already progressed than last year. Already in autumn, the management of Eldorado is said to have met with representatives of Caesars on takeover talks. Here, however, the talks failed prematurely. Another prospect in autumn was the Texas billionaire Tilman Ferttitta.

Ferttitta has the significantly smaller gambling empire golden nugget. On the other hand, there was a specific offer from the Texas billionaire, which was rejected by Caesars. According to rumors, Ferttitta has not yet given up hope for a merger. Due to the size of Eldorado -The annual turnover is almost two billion US dollars-they areOpportunities for Ferttitta but rather low, since Eldorado can support a fusion with more real estate mass and structure.

Good to know::

Eldorado Resorts Inc. has and operates 26 properties in 12 states of the United States. The company recently bought the casino and catering driver Tropicana Entertainment for $ 1.85 billion. Previous owner: Icahn Enterprises.