Golden Nugget Owner Tilman Fertitta Invests in Caesars Entertainment Following Failed Merger Offer

Posted on: February 19, 2019, 01:00h. 

Last updated on: February 18, 2019, 04:56h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Billionaire Tilman Fertitta has purchased roughly four million shares of Caesars Entertainment less than four months after his proposal to merge his Golden Nugget properties with the Las Vegas casino operator was rejected.

Tilman Fertitta Caesars stock Golden Nugget
Tilman Fertitta couldn’t convince Caesars Entertainment to unite with his Golden Nuggets, so he’s instead buying shares in the casino operator. (Image: Jin Lee/Bloomberg)

A source close to Fertitta told Bloomberg the investment was made because the businessman believes Caesars remains undervalued. The specific date of the transaction wasn’t revealed, but over the last week of trading, shares have hovered in the $9 to $9.60 range.

That means Fertitta’s stake in Caesars is likely around $36 million to $38.5 million. Forbes estimates Fertitta’s net worth to be $4.8 billion.

Fertitta is the sole owner of Landry’s, his dining, hospitality, entertainment, and gaming corporation. The Landry’s portfolio includes five Golden Nugget casinos: two in Nevada, one in Atlantic City, and one each in Biloxi, Mississippi, and Lake Charles, Louisiana.

Billion Dollar Buyer(s)

Along with Landry’s and Golden Nugget, Fertitta owns the NBA Houston Rockets. He also stars on the CNBC show Billion Dollar Buyer, a reality series where prospective business owners hoping to work with him make pitches to land their “deal of a lifetime.”

When it comes to Caesars Entertainment, however, Fertitta isn’t the only billionaire buyer in the game.

Fertitta’s four million shares amount to less than one percent of the total company. Fellow billionaire Carl Icahn has amassed a 10 percent stake in the casino empire. Hedge fund HG Vora Capital owns nearly five percent.

Last October, Fertitta proposed a reverse takeover at $13 per share. Landry’s laundry list of restaurant chains – which include Morton’s, Bubba Gump Shrimp, and McCormick & Schmick’s – would be placed inside many of Caesars’ 49 casinos.

Fertitta also would have assumed the role of CEO of the combined company. Caesars rejected the scheme, saying it wasn’t “consistent with the company’s plans to create and enhance shareholder value over the long term.”

Reports surfaced last week that Icahn is pushing Caesars to consider selling the company. Along with Golden Nugget, Eldorado Resorts has been mulling an offer, and there’s been speculation that MGM Resorts is additionally interested.

Sale Imminent?

Bloomberg says Caesars Entertainment’s Chapter 11 bankruptcy reorganization left the company with a shareholder base controlled by “distressed debt investors and hedge funds, as well as its original private equity firms, Apollo Global Management and TPG.”

The activist investors and hedge funds have been seeking a leadership change, and potential sale. Caesars CEO Mark Frissora announced his resignation in February, but is remaining with the company until his successor is identified.

Despite months of acquisition rumors, Wall Street investors largely haven’t bet on Caesars. Shares were trading around $9 in October, and closed Monday at $9.15 – not exactly the type of surge typically associated with a company being acquired.

Caesars will release its Q4 and full-year 2018 earnings on February 21. The Zacks Investment Research consensus is that the company will report revenues of $2.1 billion in the final three months of the year, but a loss of $0.10 per share.