Caesars Entertainment said Wednesday its board and management has “engaged in discussions” with corporate raider Carl Icahn and will “carefully evaluate” his suggestions.
In a statement filed with the Securities and Exchange Commission, the Las Vegas-based casino company said it would also consider Icahn’s request for representation on the board.
The statement came a day after Icahn, 83, disclosed in an SEC filing that he had acquired a nearly 10 percent stake in Caesars and was looking to push the company into a sale. Icahn, a long-time activist investor who has owned several casinos and casino companies over the years, said in his filing that Caesars was undervalued and the best way to boost the stock price was through a sale.
“We believe that our brand of activism is well suited to the situation at Caesars, which requires new thought, new leadership and new strategies,” he said in the filing.
Activist investors have been at war with Caesars since the company exited a 30-month bankruptcy reorganization in October 2017. The company’s stock price took a huge hit in the summer and fall, dropping below $6 a share. Caesars has been trading above $9 a share in recent weeks.
“Caesars’ Board and management are pursuing a diversified growth strategy to create long-term value for stockholders and are committed to being prudent stewards of capital,” the company said in its statement.
Icahn’s involvement in Caesars, first reported back in January, is part of the overall speculation swirling around the company, which is one of the largest casino owners on the Las Vegas Strip and operates more than 40 casinos in 13 states.
Caesars is still searching for a new CEO following November’s announcement that Mark Frissora would step away from the position this month. When the search stalled, Frissora agreed to stay on the job through April. Icahn told the company in the SEC filing to abandon the CEO pursuit and not extend Frissora’s tenure.
Meanwhile, Houston billionaire Tillman Fertitta, who owns the Golden Nugget casino chain, acquired a less than 1 percent stake in Caesars. Last fall, Fertitta was rebuffed by the Caesars board when he proposed a merger of the two casino operators that would have ultimately seen him controlling the combined company.
Caesars will announce fourth quarter and year-end earnings Thursday afternoon, where the Icahn activity and proposal is expected to come up.
In its statement, the Caesars board “remains open to all reasonable alternatives to enhance value for Caesars’ stockholders and has and will continue to evaluate strategic alternatives presented.”
The company said it considers a number of factors, “including potential value creation and execution risk, given our highly regulated environment in the various domestic and international jurisdictions in which we operate.”
Caesars said previous offers brought to the company’s board “were considered, in consultation with its legal and financial advisors, and determined to undervalue the company and its plan to create stockholder value over the long term.”
Shares of Caesars, which rose more than 5 percent on Tuesday, closed Wednesday unchanged at $9.62 on the Nasdaq.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
