Fertitta might bet on Caesars again
Earlier merger bid rejected, but board now has new faces
Houston billionaire Tilman Fertitta is back in the game to potentially merge his hospitality, casino and restaurant holdings with Las Vegas gaming giant Caesars Entertainment Corp.
Fertitta, the Galveston-born hospitality magnate, reality TV star and owner of the Houston Rockets, is conducting due diligence for the possible acquisition of Caesars, according to a source familiar with the situation.
Fertitta made a run for the company last year, but his bid was rejected by the Caesars board. Since then, however, new board members have been installed and activist investor Carl Icahn, who has been buying up shares in Caesars, has been pushing for a sale of the company.
Fertitta, owner of the Landry’s restaurant empire and five Golden Nugget casino properties, purchased 4.5 million shares in Caesars after his November bid was rejected. His proposal would have combined his businesses into Caesars in what’s referred to as a “reverse merger,” a way for a private companies to go public without going through an initial public offering. The deal would have put Fertitta at the helm of the larger company.
The New York Post first reported this week that Caesars had opened its books to Fertitta. Another suitor, Eldorado Resorts, based in Reno, Nev., has reportedly also looked at Caesars’ books. Caesars declined to comment Thursday, as did Fertitta’s company.
The timing of a potential sale is unclear, though the Post, citing anonymous sources, said Caesars plans to announce within days that its board has approved a sales process for the company.
Howard Stutz, executive editor of CDC Gaming Reports, a trade publication in Las Vegas, said Caesars could be too big for one buyer, relative to the cost and potential antitrust issues.
“To me, it seems one company buying Caesars is really hard,” Stutz said. “I think it’s going to be multiple companies coming in
and carving it up.”
He said he hasn’t heard if other gaming companies are interested beyond Eldorado and Golden Nugget.
Stutz said that with Icahn recently taking control of three board positions as part of a March 1 deal with Caesars, a reverse merger could come up again. Caesars CEO Mark Fissora is set to step down April 30, and under the terms of the deal Icahn struck with Caesars, the activist investor has the right to appoint a fourth director if a new chief executive is not named within 45 days of March 1.
“It’s a completely different board from the one that rejected (Fertitta’s) first bid,” Stutz said.
In a March 1 news release, Icahn said the best path forward for Caesars would be a sale or merger.
“Caesars would be a great opportunity for certain investors who have already expressed interest, and I’m glad the board will explore these opportunities,” he said.
Stutz also noted that VICI Properties, a real estate investment trust spun off by Caesars to own some of its properties, has been handing over operations of Caesars casinos to other operators. Through a similar arrangement, Fertitta could end up with Caesars properties in Vegas without buying the whole company.
Shares of Caesars closed at $9.40 on Thursday, up 3.9 percent for the day.