So, Caesars Entertainment (CZR) is having a moment. The casino giant's stock shot up 19% on Thursday after reports surfaced that it's weighing takeover interest from multiple parties. One of those parties is reportedly linked to billionaire Tilman Fertitta, the guy behind Fertitta Entertainment and the Golden Nugget casino brand. But that's not the only option on the table; Caesars is also reportedly exploring a path where the current leadership team would buy the company themselves.
Think about it this way: you've got a company that's suddenly the belle of the ball, with at least two very different suitors knocking on the door. One is a strategic buyer from within the industry (Fertitta), and the other is the company's own management team. That's the kind of situation that gets investors excited and sends a stock soaring.
The backdrop for all this deal chatter is Caesars' latest quarterly report. It's a bit of a mixed bag, but it shows why someone might want to buy the place. Revenue came in at $2.92 billion, which was better than the $2.89 billion Wall Street was expecting and up from $2.8 billion a year ago. On the other hand, the company posted a loss of 33 cents per share, which was wider than the 17-cent loss analysts had forecasted.
But here's the part that really matters for anyone thinking about writing a big check: the cash flow. Caesars reported same-store adjusted EBITDA of $901 million, up from $882 million in the same period last year. That's the kind of number that gets the attention of private equity firms and strategic buyers because it shows the underlying business is generating cash, even before you start talking about any synergies or cost cuts from a merger.
And then there's the digital business. This is the part of the story that might be the most interesting. Caesars Digital, which includes its online sports betting and casino operations, delivered a record $85 million in adjusted EBITDA. That's a massive jump from the $20 million it posted in the prior-year quarter. CEO Tom Reeg pointed to this digital performance as a key driver for the company's overall year-over-year improvement, alongside stable results in its regional casinos and better trends in Las Vegas.
This digital success helps explain the takeover interest. A casino company that can grow a high-margin digital segment while keeping its traditional brick-and-mortar operations steady is a much more attractive asset. It gives a potential buyer multiple levers to pull and potentially de-risks the investment. For a strategic buyer like Fertitta Entertainment, it could mean combining casino portfolios and digital platforms. For a management-led buyout, it's a story of a turnaround they believe they can continue to execute.
In the end, Caesars shares closed up 19.11% during regular trading and ticked up another 1.09% after hours, finishing at $25.01. When a stock moves that much on takeover rumors, it's a clear sign the market thinks something is likely to happen. The question now is whether it will be Fertitta, the management team, or maybe even another party that wasn't in the initial reports. Either way, the casino floor just got a lot more interesting.
