A competing bid to Tilman Fertitta’s $17.6 billion takeover offer for Caesars Entertainment (NASDAQ: CZR) is unlikely to emerge, though it remains unclear when those parties will formally announce they’re moving forward.
In a report to clients published this evening, Stifel analyst Steven Wieczynski said the odds are long that another acquisition proposal comes forth for the Harrah’s operator.
“We continue to forecast the acquisition by Fertitta Entertainment for $31/share as structurally in place and continue to see little evidence that a higher bid will emerge,” wrote the analyst.
Caesars delivered second-quarter results today after the close of U.S. markets, but it appears there wasn’t much discussion of Fertitta’s takeover proposal. The go-shop period in which Caesars could have engaged with other suitors expired on July 11. Since then, the two parties have been quiet.
It’d Be Surprising if Another Caesars Bid Emerges
There’s been ample speculation that Caesars shareholder and longtime gaming investor Carl Icahn is working on a $33 per-share for the casino operator, which would top the $31 a share Fertitta is offering, but nothing solid has been announced.
While some on Wall Street believe Fertitta’s offer slightly undervalues Caesars, the consensus wisdom consistently indicated another suitor would not emerge for the gaming company. Wieczynski concurs with that view.
“With multiple large stakeholders (including the Carano family ~5% owners) showing support, we believe a higher offer is unlikely at this point and therefore think the most probable outcome are is that the deal goes forward at the proposed price,” wrote the Stifel analyst.
Caesars’ board, of which two high-ranking executives of Icahn Enterprises (NYSE: IEP) are members, endorsed the Fertitta offer, encouraging shareholders to vote in favor of it.
Caesars Q2 Results: Strip Slump
Commentary around the Caesars buyout arrived on the day the operator delivered second-quarter results. Amid weakness on the Las Vegas Strip where it’s the second-largest operator, Caesars lost 35 cents a share in the June quarter on revenue of $2.99 billion. The top-line number slightly beat analyst forecasts, but Wall Street expected a profit of five cents a share.
Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of $920 million was 4% below Wall Street forecasts. Strip table hold of 16.6%, a year-over-year decline of 450 basis points, was a culprit as was lower hotel occupancy in the U.S. casino center.
Caesars’ regional casino showing was better with Truist Securities analyst Barry Jonas highlighting evidence that capital investments at the company’s Lake Tahoe, Nevada and New Orleans gaming venues are paying off.
Speaking of capital investments, Caesars is at the end of the latest expenditure campaign, indicating that if it remains a standalone company, it could have the flexibility to pare debt, which stood at $11.8 billion at the end of June. The company has $965 million in cash on hand.
