Caesars Takeover Interest Sparks 19% Rally — But $30B Enterprise Value Complicates Any Deal

Takeover speculation sent Caesars Entertainment shares up 19%. Still, with $11 billion in net debt and more than $1.2 billion in annual lease obligations, any acquisition would be far larger — and more complex — than the $5 billion equity value suggests.

Caesars Entertainment shares surged 19% after the Financial Times reported that the casino operator is weighing takeover interest from multiple bidders. But behind the $5 billion equity rally sits a far larger reality: roughly $11 billion in net debt and more than $1.2 billion in annual lease obligations that could complicate any deal.

Financial Times sources said Texas billionaire Tilman Fertitta — the U.S. ambassador to Italy —has submitted a bid. Caesars’ management has also put a buyout proposal on the table.

Talks are ongoing and could collapse at any time, according to the report. The report also highlighted the difficulty of financing such a deal, noting it would likely require significant backing from Wall Street banks. Caesars’ market value stood at $5 billion at the close of trading on Thursday.

However, that equity value understates the scale of any potential transaction. Including roughly $11 billion in net debt and billions more in long-term lease obligations, Caesars Entertainment’s enterprise value exceeds $30 billion.

Any acquirer would effectively be negotiating not for a $5 billion company, but for a highly leveraged operator with substantial fixed financial commitments.

Fertitta’s Bid: Cross-Ownership, Capital Capacity, and Regulatory Hurdles

Tilman Fertitta has long invested in casino and hospitality assets. He originally built his fortune through his Landry’s restaurant empire, which includes brands such as Rainforest Café, Bubba Gump Shrimp, and Morton’s Steakhouses.

Landry’s grew into one of the largest privately held restaurant and hospitality groups in the U.S., providing Fertitta with the cash flow base that later financed his gaming expansion.

He used that company to purchase the Golden Nugget casinos in Las Vegas and Laughlin, Nevada, for $295 million. Fertitta later expanded the Golden Nugget brand across multiple jurisdictions, including Atlantic City, Mississippi, and Louisiana.

He then entered online gaming and sold Golden Nugget Online Gaming to DraftKings in May 2022 for about $1.6 billion. In June 2022, he bought six acres of land on the Las Vegas Strip for $270 million with plans for a 43-story resort. After being nominated as U.S. ambassador to Italy in late 2024, those plans were put on hold.

Fertitta also became the largest shareholder in Wynn Resorts in November 2024, increasing his stake to 12.3% by April 2025. If he succeeds in acquiring Caesars, regulators could raise concerns about conflicts of interest.

While serving as U.S. ambassador, Fertitta continues to own and oversee his hospitality empire and the NBA’s Houston Rockets, maintaining a diversified portfolio spanning gaming, restaurants, sports, and real estate.

He is also a cousin of Station Casinos owners Lorenzo and Frank Fertitta, although he holds no role in that business.

If Fertitta acquires Caesars, he could have to sell certain assets. A combined Golden Nugget-Caesars group would control four casinos on the Atlantic City boardwalk and three each in Laughlin and Lake Tahoe. However, Caesars rejected a reverse merger proposal from Tilman Fertitta in 2018, so he will be hoping for better luck this time around.

An MBO Under Leverage: $11B Debt and $1.2B in Annual Rent

A management buyout (MBO) presents another path. CEO Tom Reeg would likely lead the effort. Before joining Caesars, he worked as a junk bond trader. He has led Caesars since the company completed its $17.3 billion merger with Eldorado Resorts in July 2020. He could use his debt-market experience to structure a complex deal.

Caesars still carries significant debt from the Eldorado merger. At the end of 2025, the company reported $11 billion in net debt and $2.4 billion in net interest payments for the year. Any buyer would assume that burden from day one, which would take some of the shine off Caesars’ $3 billion in annual cash flow.

Leases with VICI Properties REIT add another challenge. Following its post-bankruptcy restructuring, Caesars spun off much of its real estate into VICI Properties and now leases those assets back.

VICI Properties posted its full-year 2025 results on Feb. 25. It shows $497 million in revenue from the Caesars Las Vegas Master Lease and $728 million from regional Caesars leases, for a total of $1.225 billion. Any buyer would need to service both the debt and these lease obligations.

Taken together, interest expense and lease obligations consume nearly all of Caesars’ $3.6 billion in annual Adjusted EBITDA before discretionary capital allocation. That fixed-charge burden materially constrains financial flexibility and complicates any highly leveraged acquisition scenario.

Management teams pursuing MBOs typically partner with private equity firms that provide most of the equity capital. Large firms with gaming experience would likely participate. TPG and Apollo previously acquired Caesars, then known as Harrah’s, in 2008 for $30 billion shortly before the Great Recession. The deal ultimately ended in a 2015 bankruptcy filing.

Carl Icahn’s Playbook — and Why Caesars’ Digital Arm May Be Next

Carl Icahn could also re-enter the picture. He has maintained a decades-long relationship with Caesars and has repeatedly bought distressed casino assets, improved operations, and sold them at a profit.

Icahn acquired the casino operations of the Las Vegas Stratosphere in 1998 and sold them in 2008, earning a $1 billion profit. He also sold the Aquarius and Arizona Charlie’s in Laughlin as part of that transaction.

In February 2010, he purchased the unfinished Fontainebleau Las Vegas out of bankruptcy for about $150 million. He later sold it for $600 million in 2017, generating a $450 million profit. He also bought Tropicana during its bankruptcy in 2008, replaced its leadership, restructured the company, and sold it for $1.85 billion in April 2018.

Icahn built a 9.8% position in Caesars in 2019 for $566 million, increasing that to 15.6% shortly after. He pushed for a sale, secured board representation, and influenced corporate governance changes. Within four months of disclosing his stake in February 2019, Caesars agreed to sell to Eldorado Resorts in June 2019 for $17.3 billion. Icahn made substantial profits from the deal.

Icahn began rebuilding an investment in Caesars in 2024. At the time, he said he supported management and did not plan to act as an activist investor. He held 2.44 million shares, representing only about 1.17% of the company.

However, he’s taken on a more active role as of late. Caesars appointed Icahn Enterprises CFO Ted Papapostolou and general counsel Jesse Lynn to the board in March 2025.

Icahn then said he would evaluate “strategic alternatives” for the company’s “underappreciated digital business.” He argued that spinning off Caesars Digital could unlock a valuation between $4.6 billion and $7.6 billion.

Facing Financial Headwinds

Caesars’ share price remains 73.5% below its 2022 high. The company released its Q4 2025 earnings on Feb. 17, showing total net revenue rose 2.4% to $11.5 billion. Regional properties drove much of the gain, increasing revenue 3.9% to $5.8 billion.

Caesars Digital revenue climbed 21.1% to $1.4 billion, further underscoring its status as a key growth driver. Las Vegas revenue fell 4.7% to $4 billion, reflecting a 7.5% drop in citywide visitors in 2025. CEO Tom Reeg described the period as a “soft summer.”

Despite modest revenue growth, net losses widened from $278 million in 2024 to $502 million in 2025. High interest expenses and impairment charges drove the decline.

Caesars generated $3.6 billion in Adjusted EBITDA but paid $2.3 billion to lenders, leaving limited financial flexibility. As of Dec. 31, 2025, the company carried $11.9 billion in total outstanding debt, including $6.1 billion in bank debt and loans and $5.8 billion in notes.

Net debt declined slightly year over year to $11 billion. The company held $887 million in cash and maintained a $2.1 billion revolving credit facility, bringing total liquidity to $2.8 billion.

Management repurchased 14.7 million shares for $420 million since mid-2024, signaling confidence in the company’s long-term valuation despite leverage concerns.

Strong Momentum Online

Caesars Digital remains the company’s strongest growth engine. It operates Caesars Sportsbook & Casino, Caesars Palace Online Casino, Tropicana Casino, and Horseshoe Online Casino. The iGaming operations have been the primary driver of digital profitability.

Adjusted EBITDA for Caesars Digital more than doubled from $117 million in 2024 to $236 million in 2025. The digital division generated a record $85 million in EBITDA in Q4 2025 alone. Icahn has cited that momentum to support his argument that the digital business carries greater standalone value.

Looking ahead to 2026, CEO Reeg expressed cautious optimism. He expects capital expenditures to decline now that major growth projects in New Orleans and Virginia have concluded. He also expects lower cash interest expenses to increase free cash flow. Management plans to use additional cash to reduce debt and continue share repurchases.

Whether a bidder emerges or management keeps control, Caesars now stands at a strategic crossroads. With a highly leveraged balance sheet, valuable digital growth assets, and significant lease obligations, the next move — a sale, a spinoff, or steady deleveraging — will determine whether the recent rally marks the start of a turnaround or just another brief spike in a volatile chapter.

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