Game over: Fertitta’s Caesars bid ends as Eldorado takes the prize
Entrepreneur may still grab properties from Vegas casino empire
Houston billionaire Tilman Fertitta’s eight-month pursuit of Caesars Entertainment ended Monday after Eldorado Resorts said it was buying the Las Vegas casino giant in a $17.3 billion deal that would create the world’s largest gaming company.
Despite not landing the big prize, Fertitta could still wind up with a piece of Caesars’ vast empire. Reno, Nev.-based Eldorado on Monday said the combined company plans to sell some of Caesars’ nine casinos on the Las Vegas Strip, as well as casinos in other states, to avoid federal antitrust issues.
“That could put Tilman back in the game, depending on what they sell,” said Howard Stutz, executive editor of CDC Gaming Reports, a trade publication in Las Vegas. “I wouldn’t count Tilman out from trying to grab one or two properties on the Strip.”
Fertitta, who owns five Golden Nugget casinos, did not respond to a request for comment Monday.
The Galveston-born hospitality mogul — star of CNBC’s “Billion Dollar Buyer” and owner of the Houston Rockets — began pursuing Caesars last year after being approached by some shareholders who wondered whether he had any interest in the company.
Caesars, one of the best known brands in gaming with more than
50 casino and hotel properties, emerged from Chapter 11 bankruptcy in 2017. Fertitta, who has an estimated net worth of $5.1 billion, had earned a reputation as a hard-charging entrepreneur who can turn underperforming companies around and strike it rich.
Monthslong effort
He made his first bid for Caesars in October, which would have had the Las Vegas company absorbing Fertitta’s restaurants and Golden Nugget casinos — including debt — in an exchange of stock that would give Fertitta control of the combined company. The proposed deal valued Caesars’ shares at $13 each.
Caesars’ board rejected Fertitta’s proposal in November, but he remained undeterred. The tenacious dealmaker purchased 4.5 million shares in Caesars, and earlier this year began conducting due diligence to make another run at the company.
Ultimately, Eldorado won the bid for Caesars in a deal backed by activist investor Carl Icahn, who acquired a 28.5 percent ownership stake in Caesars and pushed for its sale. Eldorado will pay $8.6 billion — or $12.75 per share in cash and stock — to acquire the company.
The deal, including debt, is worth approximately $17.3 billion, the companies said.
“This merger is the quintessential example of how an activist shareholder, working collaboratively with the board, can greatly enhance value for all stockholders,” Icahn said in a statement, adding that the deal price represents a premium of 51 percent over Caesars’ trading price on the day before Icahn’s representatives joined Caesars’ board.
The combined business will be called Caesars and be headed by Eldorado CEO Tom Reeg and Eldorado Chairman Gary Carano. The deal is expected to close in 2020.
Caesars’ stock ended the trading day Monday up 14.5 percent to $11.44 a share. Eldorado’s stock ended the day down 10.6 percent to $45.77 per share.
‘There’s a history there’
Stutz, the Las Vegas gaming analyst, said he did not know why Caesars and Icahn ultimately chose Eldorado over Fertitta, but said prior business relationships may have played a role. Icahn sold Tropicana Entertainment, including its flagship Atlantic City casino, to Eldorado last year in a $1.85 billion deal.
“There’s a history there,” Stutz said. “That may have played into it.”
Ultimately, Fertitta may not have wanted to acquire Caesars Entertainment, Stutz said. After all, Fertitta said he took his Landry’s restaurants public in 1993 and took it private again in 2010 so he wouldn’t be beholden to quarterly earnings and shareholders.
“He may not have wanted the whole company, and Caesars is a big company,” Stutz said. “He’s got a lot already, especially with the Rockets. How many things does he want?”