Acquisition of Caesars Acquisition Company (CACQ) by Caesars Entertainment Corporation (CZR) May Not Be in Shareholders’ Best Interests
Robbins LLP are investigating the proposed acquisition of Caesars Acquisition Co. (NASDAQGM: CACQ) by Caesars Entertainment Corp. (NASDAQGM: CZR). On December 22, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Caesars Entertainment will acquire Caesars Acquisition. Under the terms of the agreement, Caesars Acquisition shareholders will receive $8.96 for each share of Caesars Acquisition common stock based on the December 19, 2014 closing price.
Is the Proposed Acquisition Best for Caesars Acquisition and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Caesars Acquisition is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $8.96 merger consideration represents a discount of 13.9% based on Caesars Acquisition’s closing price on December 19, 2014. This discount is significantly below the median one month premium of nearly 45.8% for comparable transactions within the past five years.
On November 10, 2014, Caesars Acquisition released its earnings results for its third quarter 2014, reporting strong quarterly earnings. Total net revenues for the third quarter fiscal 2014 were $485.8 million, compared with $325.8 million for the comparable quarter in fiscal 2013, representing 49.1% year-over-year growth. Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the third quarter fiscal 2014 were $105.4 million, compared with $78.7 million for the comparable quarter in fiscal 2013, representing 74.5% year-over-year growth. In commenting on these results, Caesars Acquisition Chief Executive Officer Mitch Garber remarked, “Caesars Growth Partners, LLC reported another solid quarter of results driven by year over year growth in both of our operating segments. Our Interactive Entertainment business continues to deliver impressive results, primarily from our market leading social and mobile games business…. Overall, we are confident that our strategy of developing new projects in key markets and investing capital to expand and enhance our existing casino and interactive portfolio will drive growth and solid operating results for CGP.”
In light of these facts, Robbins LLP is examining Caesars Acquisition’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Caesars Acquisition shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Caesars Acquisition shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.