Caesars confirms Icahn activist restrictions in return for board seats
Operator publishes list of requirements that will apply to investor firm after it secured two board seats earlier this week
Caesars Entertainment has revealed that activist investor firm Icahn Enterprises has agreed to not fight proxy battles, nor take more than 5% ownership in the company in return for two board seats.
Earlier this week, the Las Vegas-based firm announced Icahn Enterprises CFO Ted Papapostolou and general counsel Jesse Lynn had joined the board, subject to regulatory approvals.
Should either Papapostolou or Lynn be required to step down, Icahn Group holds the right to replace them with a new designee.
The press release noted that Icahn Enterprises had “agreed to customary standstill, voting commitments and other provisions,” with an SEC filing now detailing those concessions in full.
Firstly, Icahn Enterprises, which is part of the Icahn Group led by Carl Icahn, has agreed not to launch proxy contests or support them in regard to the election of board members this year.
Additionally, the Icahn Group will not be able to acquire 5% or more of Caesars’ outstanding common stock during a defined standstill period.
The standstill will run until 30 days prior to the nomination deadline for the 2026 AGM, or such a date that no Icahn Group representative sits on the Caesars board, whichever comes latest.
The group will also not be able to propose or support any extraordinary transaction, which Caesars said included mergers, acquisitions, spin-offs, assets sales, or other business combinations.
Icahn Group has agreed to not make any public proposal or request to change the makeup of the Caesars board or management team.
Caesars has also stated that should Icahn Group’s shareholding dip below 10.6 million shares, then one of its board representatives must resign.
Then, if the group’s stockholding falls below 5.3 million shares, both Papapostolou and Lynn, or their Icahn replacements, must resign.
Carl Icahn had previously agitated successfully for the merger of Caesars and El Dorado in 2020.
After reports emerged he had acquired a 1.1% stake in Caesars last May, the company’s share price leapt 15%.
Speaking following Papapostolou and Lynn’s appointments, Icahn said: “I have great respect for [Caesars CEO] Tom Reeg and the senior management team and what they have accomplished since the merger in 2020.
“We look forward to working with Tom and the board to maximize value for all shareholders, including by exploring strategic alternatives for the company’s underappreciated digital business.”
On the digital business, Caesars Digital, Reeg refused to rule out the spinning off of the division as a separate, publicly listed business on an earnings call last month.
Reeg said: “Operationally it makes the most sense to keep everything together as one. But when the dichotomy is such that it’s been and is today […] we look to drive as much shareholder value as we can.
“It’s a natural time to start to think about should you be doing something else strategically that allows investors a path to investing in that business on a pure-play basis.
“And if the market dynamics remain the same, and the business continues to grow as it has, you should expect that we would look at any and all avenues in terms of how we can drive the most value to our shareholders.”