Caesars Entertainment (CZR) surged more than 11% this week after reports surfaced that two billionaires are competing to take the casino operator private. The stock closed Tuesday at $26.01 before the news broke. By Thursday it was trading around $29.07.
Caesars Entertainment, Inc., CZR
The Wall Street Journal reported that Fertitta Entertainment, owned by billionaire Tilman Fertitta, is in exclusive talks to buy Caesars for approximately $34 per share. That values the deal at roughly $7 billion.
Fertitta owns Golden Nugget and holds stakes in Wynn Resorts and DraftKings. He also previously bought developable land on the Las Vegas Strip, which analysts say makes Caesars’ six owned Las Vegas properties attractive to him.
The Financial Times had flagged takeover interest in Caesars back in late February, naming Fertitta and a management group as potential bidders.
Icahn Enterprises also entered the picture with an all-cash offer of around $33 per share. Carl Icahn is already a Caesars shareholder and had two representatives placed on the company’s board last year. Despite being outbid by Fertitta’s offer, Icahn’s bid has not been formally rejected by Caesars.
Caesars CEO Tom Reeg is expected to remain involved regardless of which bid moves forward, according to sources cited by the WSJ.
That said, people familiar with the matter warned that an announcement is not imminent and a deal is far from guaranteed.
Morgan Stanley responded to the news by raising its price target on CZR to $32 from $25, while keeping its Equalweight rating in place. The bank updated its sum-of-the-parts valuation to break out operating company and property company assets in Las Vegas, along with current digital segment comparables.
The firm set a bull case of $59 and a bear case of $14. It acknowledged that Caesars has struggled to deliver consistent growth, but said the takeover reports could put a floor under the stock.
CZR has posted a 24% return year-to-date, though the stock is known for volatile price swings.
Not all analyst moves were positive. Raymond James removed Caesars from its Analyst Current Favorites list, saying it sees more upside potential in lodging stocks right now.
Citizens kept its Market Outperform rating and $34 price target intact, noting that concerns around promotional spending have eased.
Management has also discussed the potential monetization of Caesars’ digital segment, which could factor into deal structuring.
On the product side, Caesars recently launched a new online slot game called Ca$hline through its in-house studio, Empire Creative. The game is live on Caesars online platforms in New Jersey.
Morgan Stanley’s updated price target of $32 remains below both reported offer prices, reflecting continued uncertainty around whether a deal gets done.
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