Caesars Entertainment Corp (CZR)

[realfast95]

Report: Caesars, Carl Icahn Getting Close On Deal, But Price Is Sticking Point

Caesars Entertainment Corporation
CZR 1.73%
is looking to sell itself for $13 per share, but billionaire investor and major shareholder Carl Icahn is willing to accept a lower offer, according to the New York Post.
What Happened

Caesars received an offer to sell itself to rival casino company Eldorado
ERI 0.06%
for $10.50 per share. Caesars' board rejected the deal with the support of Icahn, who owns a 28.5% stake. However, the Post said the offer could be close to what Icahn is willing to accept as he is at odds with the board's $13 per share goal.

A source close to the matter told the Post Caesars is "getting close" to closing a deal as it's exploring options at a "price that is right for all shareholders."
Why It's Important

Three of the eight Caesars board members were appointed by the activist investor and the recently appointed CEO Tony Rodio is also considered an Icahn ally. Coupled with Icahn's stake, a deal with Eldorado could pass at close to $12 per share, a source said.

Icahn would net an approximate $3 per share profit as he bought most of his stake in early 2019 at around $9 per share.

Another source familiar with Icahn's operations told New York Post Icahn is likely to win the battle. After all, no is "better at getting things done than Carl."

.....................
Caesars board at odds with billionaire Carl Icahn over sale price: sources
https://nypost.com/2019/06/17/caesars-board-at-odds-with-billionaire-carl-icahn-over-sale-price-sources/

Billionaire Carl Icahn is more eager to sell casino chain Caesars Entertainment than the company’s board, The Post has learned.

The octogenarian investor thinks the board of America’s biggest gaming company is demanding too much for the $6.2 billion company in its ongoing merger talks with rival casino operator Eldorado, insiders said.

The owner of Bally’s and Harrah’s kicked off its auction two months ago with a price of $13 a share. As The Post exclusively reported on June 6, Eldorado countered with a bid of $10.50 a share, which the board unanimously rejected as too low.

Icahn, who owns a 28.5% stake in Caesars with swaps, has agreed that Eldorado’s $10.50 offer, which represented a measly 15% premium over the stock, was unacceptable. But he is also willing to accept less than the board is now seeking, sources said.

Separately, Eldorado announced on Monday that it sold three casinos and other assets, including real estate, for $385 million. The proceeds could help Eldorado raise money toward what is expected to be a stock-and-cash offer for Caesars, which also owns Harrah’s and Bally’s.

One reason for the cash raise is that Eldorado executives fear the merger could be blocked by gaming regulators if they bid much higher and become too leveraged, sources said.

Caesars, which already went through a bankruptcy in 2015 due to its debt, has more than $18 billion of net debt that would be assumed by the new merged company.
–– ADVERTISEMENT ––

Eldorado has publicly said it is not comfortable with debt levels that exceed 5.5 times, which could mean an offer price of under $12 a share, according to investment bank Jefferies.
see also
Caesars Entertainment bidder could be looking to clean house

In May, a Jefferies analyst report said that if Eldorado paid $11.50 a share for Caesars the resulting enterprise would carry debt equal to 5.4 times its Ebitdar, or cash flow, even assuming $500 million in synergies.

The two sides continue to be in advanced talks, sources said.

“They [Caesars] are getting close but are still trying to get a price that is right for all shareholders,” a source said of the talks.

Icahn has three appointees on the eight-member board and helped choose the CEO, who also gets a say in the deal. Those four votes, along with Icahn’s nearly 30% stake, could help push the deal through even if Eldorado offers closer to $12 a share, sources said.

“No one’s better at getting things done than Carl,” a source familiar with Icahn said, believing that Carl will ultimately get his way.

Icahn bought much of his stock in January for around $9 a share.

Caesars and Eldorado declined to comment. Icahn didn’t immediately return a request for comment.