Caesars Entertainment is shaking up its top leadership team after finalizing an agreement with Carl Icahn.
The infamous investor and former owner of Trump Taj Mahal in New Jersey now owns 9.78 percent of Caesars. The equity agreement allows Icahn to appoint three new members of the board of directors with immediate effect.
Here are his choices:
“Our new colleagues bring diverse and relevant experience, and we look forward to them joining our board in our ongoing efforts to further enhance value for all shareholders,” said James Hunt, chairman of the board.
Icahn can appoint a fourth director if the board does not land a new chief executive within 45 days.
Current CEO Mark Frissora is leaving the company, and an executive search committee is seeking a replacement. A report from Reuters stated that Icahn may push to appoint Tropicana CEO Tony Rodio to the position.
The future for Caesars under the new management team is already clear. Here’s Icahn in the company press release:
“I believe the best path forward for Caesars requires a thorough strategic process to sell or merge the company to further develop its already strong regional presence, which will allow Caesars to continue to take advantage of the Caesars Rewards program bringing more and more players into Caesars’ Vegas market. I expect this to make Caesars the most powerful competitor in Vegas, the gaming capital of the world.”
He adds that certain investors have already “expressed interest” in such a move.
DraftKings is now well placed to take a sizable market share in the nascent US sports betting market, and its brand is well known across the country for its daily fantasy sports offering.
It would be a manageable acquisition, but probably not sufficiently strategic to suit Icahn.
Caesars is an entertainment company, which broadens its appeal outside the pure gambling industry. This slide from a 2016 earnings presentation shows how complex the organization is:
A large part of Caesars’ business empire was bankrupt a few years ago, and Caesars Entertainment registered a $2 billion hit to its assets in 2016 as a result.
Under Frissora’s leadership, the company still hasn’t regained its full footing.
A discussion on the Motley Fool investors’ site indicates that Golden Nugget owner Tilman Fertitta might have an interest in acquisition. His Landry Group would be have to stretch to cover Caesars’ current debts and equity cost, so any move would likely be a reverse takeover.
Caesars still owns the WSOP brand and its associated online poker businesses. Should Eldorado take such a big step, the WSOP could find itself under new management. In the wildest of dreams, that could even see PokerStars involved in the World Series of Poker.
In the rapidly changing landscape of the US gaming industry, anything could happen.