NEW YORK, JUNE 15 -- Investor Martin Sosnoff today abandoned his $35-a-share, $1.1 billion bid to gain control of Caesars World Inc., ending a three-month battle for the gaming, real estate and hotel concern.
Sosnoff said a $1 billion recapitalization plan put forth in April by Los Angeles-based Caesars will provide "substantial value" for shareholders when it is implemented. The recapitalization provides for a special cash dividend of $26.25 per share as well as retention of an equity interest in the company.
Marvin Roffman, a gaming analyst with Janney Montgomery Scott Inc. in Philadelphia, said Sosnoff withdrew the bid because it was clear that investors favored the recapitalization plan.
"The offer was so close to management's that it wouldn't have paid people to bother" to tender to Sosnoff, Roffman said.
Roffman said Sosnoff planned to break up the company, which owns casinos in Las Vegas, and Atlantic City, N.J., valuable Atlantic City real estate and four profitable hotels in the Poconos.
"But at $35 a share, he had reached the point of diminishing returns," above which he probably wouldn't have been able to make a profit by selling the units, Roffman said.
In a statement, Sosnoff took credit for increasing Caesars' per-share value. He said that before his bid the company's management had refused to consider his proposal for restructuring Caesars' capitalization.
"To the extent that many shareholders have already realized a higher value for their equity in the marketplace, and the remaining shareholders will realize such value when the recapitalization plan is implemented, clearly my tender offer has succeeded," Sosnoff said.
Henry Gluck, Caesars chairman and chief executive officer, said in response to Sosnoff's announcement, "We are pleased to be moving forward with our proposed recapitalization plan."
Caesars earlier today said a special shareholders meeting to vote on the proposal has been set for July 8 in Beverly Hills, Calif.
Sosnoff said he incurred about $30 million in "potential obligations" during the bid and has produced "virtually no financial gain" for himself on an after-tax basis. He said he remains willing to negotiate a friendly deal at a higher price, but that continuing the tender offer would be too costly.
Sosnoff said he will "closely monitor the activities of Caesars' management to assure that they pursue" the recapitalization plan.
Sosnoff last week was temporarily enjoined from purchasing shares under his tender offer by a federal judge in Los Angeles. The judge ruled that the financing structure of the bid could result in the violation of margin requirements.