Carl Icahn Allegedly Amasses Stake In Caesars: What Could Happen?

Carl Icahn has amassed a sizable position in hotel and casino operator Caesars Entertainment
Caesars Entertainment
Inc., according to people familiar with the matter, Bloomberg reports this morning.

Renowned American businessman and billionaire Carl Icahn is well-known for his activism. He supports reforms to improve shareholder value and gains major interests in cheap businesses. Often, his strategies call for advocating smart asset sales, restructuring, or management changes. For instance, Icahn’s intervention in Apple
Apple
resulted in notable stock buybacks, hence raising Apple’s share price; his activity in Netflix
Netflix
saw a notable rise in the company’s market value. Through his company, Icahn Enterprises, he has impacted many businesses across several sectors, including energy, automobiles, and technology, thus establishing his reputation as a potent force in corporate America.

On July 20, 2020, Eldorado and Caesars Entertainment (the former Caesars), a diversified gaming and hospitality company, merged to form Caesars Entertainment (previously known as Eldorado, “ERI”). Post-acquisition, Eldorado adopted the former Caesar’s name and changed its ticker from “ERI” to “CZR.”. Since the merger, the management has been restructuring its balance sheet and is dedicated to improving its leverage. To accomplish its goal, it has divested many assets and closed many of its properties since the merger. The company has been vigilant in deploying its capital and trying to foray into new ventures that seem profitable and promising to its existing segments.

Clearly, things are not moving fast enough for Icahn.

Caesars Post-Pandemic

Caesars Entertainment has put numerous important plans into action to recover and expand the business post-pandemic. With an eye toward a larger portion of the growing digital gaming market, a primary emphasis has been on extending its online gaming and sports betting systems. This venture is meant to make use of the notable expansion in online gaming and provide a fresh income source.

Apart from growing digitally, Caesars has been aggressively lowering its debt, which was significant after the 2020 merger with Eldorado Resorts. To increase the financial stability of the business, this endeavor consists in selling non-core assets and refinancing current debt. Improving the company’s operational flexibility and financial sheet calls for these actions.

To draw more guests and enhance consumer experiences, Caesars has also given site upgrades and growth top priority. This covers major changes to their Las Vegas hotels and initiatives in other areas. Caesars wants to appeal to a larger audience and increase income sources by varying its offers to include more entertainment choices, dining experiences, and non-gaming facilities.

To further improve its market position and increase its clientele, the business also keeps looking at strategic acquisitions and alliances. These projects complement Caesar’s more general plan to come out of the epidemic stronger and more competitive in the gaming and hotel sectors.

Headwinds With Strategy

Caesars has had continuous difficulties with the aftereffects of the COVID-19 epidemic, despite calculated attempts. Sometimes the share price of the corporation has suffered in periods of economic uncertainty and market volatility.

Caesars’s share price rose significantly after merging with Eldorado Resorts in 2020, a reflection of hope for the future of the merged business. The share price gained from the reopening of its properties and a more general market recovery period following the pandemic. More lately, the successful execution of strategic initiatives—especially in the digital space—along with more general economic conditions have affected the stock.

Though the epidemic has presented major difficulties, Caesars Entertainment’s calculated actions in online gambling, debt reduction, property development, diversification, and strategic acquisitions have generally supported and, at times, raised its share price. These initiatives have kept investor trust and set the business up for possible long-term expansion, but it always seems to be a ‘coming soon’ strategy.

What Can Be Done To Increase Shareholder Value?

As a long term advisor to activists, my personal view is that Caesars should concentrate on a few important areas if it is to possibly raise the shareholder value. By improving the user experience and entering new areas, especially, accelerating the development of its digital gaming and sports betting platforms, it would help to capture a larger portion of the expanding digital gaming market. Further debt reduction through asset sales and refinancing will also help to increase investor confidence and financial stability.

By giving renovations top priority in high-traffic areas and extending non-gaming revenue sources through upscale eating, entertainment, and retail choices, the property portfolio will be more diverse and draw more guests. By means of cost-cutting strategies and technological integration, operational efficiency can be raised, thereby strengthening margins, and streamlining operations.

By means of focused campaigns and leveraging alliances, strengthening marketing efforts can help draw in fresh business and keep current ones. Investigating strategic acquisitions and alliances might offer market reach expansion and benefits. By diversifying the board and raising shareholder openness, improving corporate governance will help to establish confidence and show a dedication to long-term value development.

Finally, concentrating on environmental, social, and governance (ESG) projects, boosting community involvement, and carrying out shareholder value projects such as dividend payouts and share buybacks would help the company build credibility and draw a wider spectrum of investors. Through addressing these areas, Caesars Entertainment can improve its operational performance, market position, and shareholder value, thereby increasing the share price.

Let’s see what happens.

The author owns Caesars Entertainment Shares.