Icahn Caesars Offer Unlikely to Thwart Fertitta Bid

Shares of Caesars Entertainment (NASDAQ: CZR) pulled back slightly on Wednesday (July 8), giving up some of the previous session’s gains as Wall Street weights the steep logistical hurdles facing billionaire Carl Icahn’s potential 11th-hour rival takeover bid.

Late Tuesday, reports surfaced indicating Icahn is attempting to swoop in with a competing offer for the gaming company, with initial speculation pointing to a potential $35 to $40 per share range. Investment bank Jefferies has already been sounding out investors regarding their appetite for a $5 billion debt financing package to back the billionaire’s play.

Currently, the activist investor appears to be formalizing a $33-per-share bid for Caesars, slightly sweetening the $31-per-share definitive agreement from Fertitta that the casino giant’s board has already accepted. However, due to severe debt complexities—including a highly controversial liability management exercise (LME) and the fact that Fertitta’s existing financing seamlessly “travels” with current management—market analysts believe Icahn faces a tough slog in compelling the Caesars board to walk away from the Fertitta deal before Saturday’s July 11 deadline.

Including the assumption of Caesars’ $11.9 billion in liabilities, Fertitta’s offer values the target at $17.6 billion and he’s already procured financing from approximately 10 banks for the debt side of the deal, indicating his offer may be on firmer ground today than a competing pitch from Icahn.

Time Not on Icahn’s Side

As Casino.org reported on Tuesday (July 7), Icahn’s acquisition offer likely involves approaching Caesars bondholders about moving some of the gaming company’s assets into an unrestricted subsidiary — an entity from which creditors may not be able to derive adequate compensation in a change of control scenario.

That implies the activist investor’s offer carries a level of complexity not associated with the Fertitta bid and those complexities could make it difficult for Icahn to get to the finish line because Caesars’ 45-day go-shop period expires on Saturday, July 11.

While the CNBC report confirms that Icahn is indeed attempting to mount a counter-bid for Caesars, it underscores that the activist investor’s efforts only recently began in earnest. This late start leaves him with a dangerously narrow window to structure a highly complex proposal and win over a board that is already leaning heavily toward Fertitta.

Since the Fertitta offer was revealed in late May, the consensus among sell-side analysts has been that it undervalues Caesars, but that it was unlikely competing bids would materialize.

Caesars Might Have to Listen to Icahn

Assuming Icahn can mount a credible takeover offer before Saturday, Caesars may have no choice but to at least listen to the proposal because the investor holds some sway at the company.

After restarting an equity position in the Harrah’s operator in 2024, Icahn’s Icahn Enterprises holds close to 5% of the gaming company’s shares outstanding. Last year, Jesse Lynn, general counsel of Icahn Enterprises, and Ted Papapostolou, chief executive officer of that company, were added to Caesars’ board.

The casino company hasn’t revealed how individual directors view the Fertitta offer aside from telling investors that in aggregate, the board supports that bid.