Earlier this week Eldorado Resorts entered into a multi-billion dollar merger agreement with Caesars Entertainment, following months of rumours regarding protracted deals and pressure from within courtesy of shareholder Carl Icahn.
Talks of an agreement between the two parties first emerged earlier this year, days after Icahn, who last year sold his Tropicana Entertainment business for $1.85bn to Eldorado Resorts, became Caesars’ largest shareholder after taking his holding to 15.5 per cent.
Continuing to press for a sale or merger, amid involvement with directorial changes, Icahn has released a statement expressing delight at the announcement.
Despite criticising the Caesars board after undertaking a senior position in the firm, it was emphasised in the communication that “I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction.”
Adding: “As a combined company, Caesars and Eldorado will be America’s preeminent gaming company. It is rare that you see a merger where because of the great synergies “one plus one equals five.” I look forward to seeing our investment prosper.”
To read Icahn’s statement in full please see below:
“We are pleased by the announcement that Eldorado Resorts, Inc. will merge with Caesars Entertainment, at a price of $13.01 per share ($8.40 in cash and $4.61 of Eldorado stock (based on Eldorado’s closing price on June 21, 2019)). This merger is the quintessential example of how an activist shareholder, working collaboratively with the board, can greatly enhance value for all stockholders.
“The deal price represents a premium of 51 per cent over Caesars’ trading price on the day before our representatives joined the Caesars Board on March 1, 2019. While I criticised the Caesars Board when I took a major position several months ago, I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction.
“As a combined company, Caesars and Eldorado will be America’s preeminent gaming company. It is rare that you see a merger where because of the great synergies “one plus one equals five.” I look forward to seeing our investment prosper.
“Unfortunately, there are far too many boards that unlike Caesars, believe corporations are more like feudal systems, than democracies; that stockholders are the peasants who represent a necessary evil that must be tolerated, possibly patronised, but certainly ignored. Much like the feudal barons, they hire mercenaries (lawyers and investment bankers) to deal with these peasants (stockholders), if they become too unruly.
“The recent Occidental Petroleum fiasco is a great example of how CEOs and boards will go to great lengths, including “betting the company” to serve their own agendas. If their bet is successful, they and possibly their shareholders win, but if it is unsuccessful, only the shareholders lose.
“Too many boards like Occidental’s believe they are unaccountable and cannot be removed, and therefore can do almost anything they please. This attitude is a major threat to the value of America’s companies, the stockholders of which are many middle Americans who have more of their savings invested in stocks than ever before.”