arl Icahn, a billionaire investor who owns about 10% of Caesars Entertainment Corp, is planning to urge the casino operator to explore a sale.
Caesars is one of the world’s largest gambling companies, with around 50 casinos in 13 states and five countries. Its properties include Caesars Palace, Harrah’s and others on the sought-after Las Vegas Strip. The company, whose operating unit filed for bankruptcy in 2015, has a market value of more than $6 billion and about $9 billion in long-term debt.
As reported by the Wall Street Journal, two approaches were made in the past months, by Eldorado Resorts Inc and Golden Nugget LLC.
An Eldorado Resorts Inc. official made a preliminary approach to Caesars about a deal but the talks didn’t go anywhere, the people said. Hospitality-and-gambling company Golden Nugget LLC proposed a separate combination last year, which Caesars rejected.
Mr. Icahn believes that Caesars has desirable properties and that the outlook for Las Vegas is positive, the people familiar with his plans said. He believes the company would be better managed in the hands of a rival and wants Caesars to let shareholders decide if it should be sold, rather than leave it up to the board.
In addition to common stock, Mr. Icahn has another roughly 10% stake in Caesars through swaps that don’t give him control of the shares but allow him to reap the benefit of any price increase, the people said.
Caesars shares fell about 45% last year, partly due to a drop in revenue per room in Las Vegas, but they have recovered some ground recently on hopes for a sale. When Caesars rejected Golden Nugget’s proposal in November, it indicated it could be open to a sale and said Chief Executive Mark Frissora would leave.
Caesars is set to report its fourth-quarter results next week.
Closely held Golden Nugget, owned by billionaire Tilman Fertitta, has five hotel and casino locations, including one in Las Vegas and others around the country. The company had proposed that Caesars acquire Golden Nugget’s restaurant, hospitality, entertainment and gambling businesses in exchange for a significant minority stake. Mr. Fertitta had envisioned running the combined company, according to people familiar with his plans.
It’s not clear what kind of deal Eldorado had in mind. The company has a smaller market value than Caesars, roughly $3.7 billion, and primarily operates casinos outside Las Vegas. A deal with Caesars could give it access to the Las Vegas Strip and opportunities to cut costs.
Mr. Frissora joined Caesars in 2015 and saw it through a yearslong bankruptcy following a 2008 leveraged buyout by private-equity firms Apollo Global Management LLC and TPG. Mr. Icahn, meanwhile, is a Caesars bondholder.
Casino stocks have been popular wagers for activists as of late and bankers say the gambling industry is primed for more dealmaking as companies seek combinations that can provide diversification, boost footprints and improve margins. MGM Resorts International last month agreed to put Keith Meister of activist hedge fund Corvex Management LP on its board.
Mr. Icahn decided to get involved after a handful of Caesars shareholders asked him to help get the company sold, the people familiar with his plans said. He hasn’t ruled out launching a proxy fight, which he would need to do by a March 1 deadline, the people said.
Mr. Icahn and his company, Icahn Enterprises LP, have a rich history investing in casinos. He previously owned properties including the Sands Atlantic City in New Jersey and Stratosphere in Las Vegas. He sold both along with smaller properties near the market’s top, notching sizable gains ahead of the financial crisis.
In 2018, he sold majority-owned subsidiary Tropicana Entertainment Inc. for $1.85 billion to a real-estate investment trust and Eldorado.
Icahn Enterprises also bought the Trump Taj Mahal in Atlantic City following Trump Entertainment Resorts Inc.’s bankruptcy and sold it in 2017. Icahn Enterprises’ only remaining casino property is Atlantic City’s Trump Plaza Hotel and Casino, which has been closed since 2014.