Carl Icahn (Trades, Portfolio)’s Icahn Enterprises LP (IEP, Financial) announced on Monday it is selling most of its Tropicana Entertainment Inc. (TPCA, Financial) casino properties for $1.85 billion.
According to Tropicana, six of its eight casino properties will be sold to Gaming and Leisure Properties Inc. (GLPI, Financial) for $1.21 billion. Its gaming and hotel operations will merge with Eldorado Resorts Inc. (ERI, Financial), who will pay the remaining $640 million and lease the properties from Gaming and Leisure for an initial 15-year period.
This deal marks the second sale the activist hedge fund manager has made in recent weeks. Last week, Icahn sold Federal-Mogul to Tenneco (TEN, Financial) for $5.4 billion.
The deal does not include the company’s properties in Aruba, which will be sold upon closing.
The guru first established an interest in the Las Vegas-based company in 2008, when, according to Icahn, it was in the throes of bankruptcy.
“At that time, we identified this undervalued asset as being a perfect situation to deploy our modus operandi, by which we seek to acquire undervalued assets, nurture, guide and improve their condition and operations, and to ultimately greatly enhance value for all shareholders,” he said in a statement.
Among the initiatives Icahn took with turning Tropicana around were installing Tony Rodio as president and CEO and reinvesting its profits back into the company. These efforts have apparently paid off. According to GuruFocus, the company’s revenue has grown from $405.5 million in 2008 to $898.2 million in 2017.
In a statement, Rodio commented on the company’s performance.
“I am incredibly proud of what the entire Tropicana team has been able to accomplish over the past eight years, taking Tropicana from bankruptcy to one of the industry’s true success stories,” he said. “I would like to thank Carl Icahn, Icahn Enterprises and the Tropicana Board of Directors for their personal support, financial commitment and the confidence that they have shown in Tropicana’s management. This tremendous financial turnaround would not have been possible without it.”
The deal is expected to close in the second half of the year.
The market reacted positively toward the news. Tropicana shares climbed 26.82% on Monday to close at $69.75. GuruFocus estimates the stock has gained 18% year to date.
In addition, Icahn Enterprises was up 0.57% to $61.81 on Monday, while Gaming and Leisure gained 4.06% and Eldorado rose 16.25%.
Disclosure: No positions.
