Carl Icahn is caught in a game of poker with a casino baron — and he may not be holding the cards he hoped.
Caesars Entertainment, which Icahn prodded onto the auction block in April, has rejected a takeover offer from Eldorado Resorts as too low — although continued negotiations could soon lead to a higher offer, The Post has learned.
Sources said that both Caesars and Icahn, who has a 28.5% stake in Caesars with swaps, agreed to reject the Eldorado bid, which one source described as “underwhelming.”
According to another source, the cash-and-stock offer was worth roughly $10.50 a share — a relatively muted premium of 15% for Caesars shares, which closed up 1.2% on Thursday at $9.13 a share, giving the company a market capitalization of $5.72 billion.
Since killing the $10.50-a-share deal, the two sides have been hammering out a new offer that could be announced as soon as next week, people with direct knowledge of the talks said.
“The deal is very close,” one source said. A second source said the two sides were “inching closer” to a resolution. The $10.50 offer would have resulted in a skimpy return for Icahn, who has reportedly paid between $8.45 and $9.39 for his Caesars stake, which he started accumulating in January when speculation about a potential sale was already rampant. “They want to do something if it is at the right price,” a source said of Caesars and Icahn. “If Eldorado raises their price, something will happen.”
Helping Eldorado is the fact that no other bidders stepped up to the table. Golden Nugget casinos, owned by Houston Rockets owner Tilman Fertitta, had been circling a merger with the owner of Bally’s and Harrahs, but never submitted a viable offer.
Also working in Eldorado’s favor is Chief Executive Tom Reeg, who has worked with Icahn before and is respected by the tough-talking hedge fund manager. Weeks after becoming Eldorado’s CEO in 2018, Reeg completed the casino chain’s acquisition of Icahn’s Tropicana Entertainment, which greatly improved the company’s financial results, sources said. Caesars’ current CEO, Tony Rodio, by contrast, ran Tropicana for Icahn in the months before the sale and could not produce similar results. Given the experience, Icahn might very well prefer to have Reeg running Caesars, a gaming source told The Post.
Eldorado’s stock price — up 30% this year — also gives Reeg breathing room to walk away from the deal because the company is already doing well on its own, sources said. A key hurdle is Caesars’ $18.5 billion of net debt. Eldorado, which closed up 1% to $49.78, carries a $3.8 billion market cap and a more manageable $3.5 billion in net debt. As The Post exclusively reported last month, Reeg had been desperately searching for half a billion in cost savings he could squeeze out of Caesars before making a bid, suggesting layoffs could be in the cards if the deal goes through.
Caesars, which owns 37 US casinos in the US as well as 13 overseas properties, has 66,000 workers. Eldorado, which runs 26 properties, including Circus Circus and Tropicana, has 18,700 workers.