Activist investor Carl Icahn has recently become the biggest shareholder in Caesars Entertainment after entities related to him acquired 38.9 million shares in the gaming company last week. By so doing, the investor’s stake went up to 15.53 percent up from the about 10 percent stake he had amassed over the past few months thus bringing his total investment in the company to a whopping $1 billion.
At about the same time that Mr. Icahn upped his stake in the Las Vegas-based gaming and hospitality provider, it was also announced that the company had agreed to replace three of its board members after the exit of three others. The new members of the 12-person Caesars Entertainment board were nominated by Carl Icahn and included Courtney Mather, James Nelson, and Keith Cozza – the latter is the current chief executive of Icahn Enterprises.
Amidst all that, it was also revealed last week that Apollo Global Management LLC and TPG Capital, the owners of Caesars Entertainment have cut their stake in the gaming company by selling close to 36.7 million of the Caesars shares. As it stands, Hamlet Holdings, which is the holdings company for Apollo Global Management LLC and TPG Capital, has been left with just about 5.7 percent on the casino owners’ stock.
Well, for quite some time now, the company has become a very popular target among hedge funds that are looking for undervalued companies or possible sale targets – Caesars is presumably a sale target since it is by no means undervalued at the time of this writing. A more reasonable explanation for this would be the fact that investors have begun to see the potential of the gaming sector and are therefore looking to capitalize on it.
With Carl Icahn now being the largest shareholder, the possibility of a sale is now in focus more than ever before. The investor and a few other stakeholders have in the recent past proposed that the best course of action for the company would be a merger or a sale.
“Caesars would be a great opportunity for certain investors who have already expressed interest, and I’m glad the Board will explore these opportunities,” the 82-year old billionaire investor said last week.
In addition to proposing a strategic process to sell or merge the company, Carl Icahn also expressed his belief that the move would only serve to “further develop its already strong regional presence.” The investor has a reputation for pressuring businesses into selling themselves and if this history is anything to go by, then it should not be too long before news of a merger or a sale makes it to the public.