Key insights
- Morgan Stanley remains neutral on the likelihood of the Caesars Entertainment acquisition closing, noting the offer represents a discount to current market valuation. The firm highlights the potential for EBITDA growth as a key fundamental unlock. While a go-shop period is included, no other bidders have been identified. The stock has seen significant gains year-to-date due to acquisition speculation.
Investing.com - Morgan Stanley says it takes no position on the likelihood of a deal closing for Caesars Entertainment Inc (NASDAQ:CZR) following an acquisition announcement.
The firm notes the announcement comes after several articles about a potential deal over recent months involving Tillman Fertitta, Carl Icahn, and Caesars. None of the parties commented in response to those earlier reports.
Morgan Stanley says Fertitta has previously purchased developable land on the Las Vegas Strip and could potentially see underlying value in Caesars’ still-owned real estate, which currently consists of six properties. The firm views the key fundamental unlock as being able to return the company to consistent EBITDA growth.
The announcement includes a "go-shop" period that allows for other potential bids. Morgan Stanley says it has not seen mentions of any other potentially interested bidders beyond the names given in earlier Wall Street Journal reporting.
The firm notes the deal values Caesars at approximately 7.3x to 7.5x EV/EBITDA and adjusted EV/EBITDAR. For context, Caesars currently trades at 8.92x EV/EBITDA based on its $3.5 billion in EBITDA over the last twelve months, suggesting the acquisition offer represents a discount to current market valuation. Boyd Gaming Corp (NYSE:BYD) has the largest overlap with Caesars and trades at approximately 6.7x to 6.8x consensus EV/EBITDA on a lease-adjusted basis as it owns roughly 85% of its real estate.According to InvestingPro analysis, which provides comprehensive Pro Research Reports for over 1,400 US equities including Caesars, the stock has surged 23% year-to-date amid acquisition speculation. The platform’s Fair Value analysis and additional financial health metrics offer deeper insights into the deal’s potential value.
In other recent news, Caesars Entertainment has agreed to be acquired by Fertitta Entertainment in an all-cash transaction valued at approximately $17.6 billion. This deal includes the assumption of about $11.9 billion of Caesars’ outstanding debt. Under the agreement, Caesars shareholders will receive $31.00 in cash per share, marking a 49% premium over the company’s share price as of February 25, 2026. Meanwhile, Stifel has adjusted its price target for Caesars to $31, down from $35, while maintaining a Buy rating. The analyst from Stifel suggested that a higher multiple would have been more appropriate for the acquisition price.
Additionally, Tilman Fertitta is nearing the completion of the deal with the support of a $5 billion financing package from several banks, including Morgan Stanley. In related industry news, Citizens has raised its price target for Rush Street Interactive to $30 from $27, citing strong gaming margins. This increase reflects positive results across the gaming industry, with companies like Caesars, BetMGM, and FanDuel also performing well.
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