Carl Icahn Discloses Stake, Urges Sale of Caesars

LAS VEGAS—Billionaire investor Carl Icahn has disclosed a 9.8% stake in Caesars and is urging for a sale of the gaming giant.

According to a regulatory filing Tuesday, Icahn acquired the positions in the shares on the belief that they were undervalued. There are discussions underway with the gaming company’s board of directors and management to discuss enhancing shareholder value, improving asset optimization and seeking board representation, including, if necessary, by nominating a slate of directors at the 2019 annual meeting, the filing stated.

Icahn has recommended that the board conduct a strategic process to comprehensively assess the best path forward for Caesars and believe that shareholder value might be best served, and enhanced, by selling the company.

“We believe that our brand of activism is well-suited to the situation at Caesars, which requires new thought, new leadership and new strategies and have acquired a substantial investment in the Issuer in the belief that it will provide us with significant influence in the company’s future. We look forward to holding discussions with the board, and importantly, we expect the Issuer to refrain from appointing a new CEO—or further extending Mark Frissora’s tenure—until we have had an opportunity to meaningfully engage with the board.

Icahn is no stranger to merger and acquisitions in the casino industry. He sold Tropicana Entertainment, which he purchased out of bankruptcy, to Eldorado Resorts and Gaming and Leisure Properties in 2018. He also sold the shuttered Taj Mahal casino in Atlantic City, NJ, which he originally purchased out of bankruptcy, to Hard Rock International in 2017.

In response, Caesars Entertainment Corporation released a statement regarding Icahn’s disclosure:

“Caesars Entertainment regularly engages with our stockholders and considers their ideas and input regarding stockholder value. The board and management have engaged in discussions with Mr. Icahn and expect to continue a constructive dialogue. The company intends to carefully evaluate Mr. Icahn’s suggestions, including his request for board representation.

“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. Following emergence from reorganization in October 2017, Caesars has continued to expand margins by driving record labor and marketing efficiency levels, while also achieving all-time high customer and employee satisfaction. Additionally, we continue to improve our Las Vegas EBITDAR margins which are the highest among all of our competitors. The company has also reduced annual interest expense by approximately $300 million since 2017.

“We are investing in top line growth by innovating in our core gaming business, leveraging our superior loyalty and marketing programs, and moving quickly to capitalize on emerging trends. We continue to focus on expanding margins by refining our operating model, in part by seeking more opportunities to increase efficiency. We are also pursuing inorganic growth through acquisitions and brand licensing opportunities, including opening the company’s first non-gaming resort, Caesars Bluewaters Dubai, last year. We expect to generate strong free cash flow in the coming years which will fuel further growth and deleveraging.

“Consistent with its fiduciary duties, the board remains open to all reasonable alternatives to enhance value for Caesars’ stockholders and has and will continue to evaluate strategic alternatives presented to it across 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. Any such alternatives previously brought to the Board’s attention 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.”