Sosnoff Will Not Tender His Shares to Caesars World

New York money manager Martin T. Sosnoff declared Thursday that he will not tender his 12% stake in Caesars World in response to the company’s offer to buy back 31% of its stock from the public.

Caesars made the offer Monday, and Sosnoff had not commented on it before.

According to public records, Sosnoff has the largest individual holding in the Los Angeles firm, which operates casinos in Nevada and New Jersey.

The company’s tender offer, which began Tuesday, replaced a $1-billion recapitalization plan rejected last month by New Jersey casino regulators. That plan had been management’s response to an unsolicited Sosnoff takeover bid. Sosnoff abandoned the bid last June after an adverse court ruling on the proposed financing for part of his $35-a-share offer.

While criticizing the new company move, Sosnoff was vague Thursday about his intentions. He said he was “continuing to review his options.”

Caesars is to pay between $29.50 to $34 a share for 11 million shares, with the amount to be determined by a so-called Dutch auction. Each stockholder may tender shares at a price within the range. The company will accept shares in order of the tender price, beginning with the lowest. The highest price paid in reaching 11 million shares will then be paid for each tendered share. The company stands to pay out $325 million to $374 million.

Sosnoff blasted the offer as “the latest pusillanimous act by Caesars’ management to avoid any threat to its control of the company.” He said the motivation is to “purge all arbitrageurs and other short-term professional shareholders” from the company’s stockholders.

Caesars World declined to comment on Sosnoff’s statement. In making the offer, the company had said it was not recommending that any shareholder tender his shares.

Analyst Marvin Roffman of Janney Montgomery Scott in Philadelphia estimated Thursday that about 40% of the company’s stock is in the hands of arbitrageurs and said he expects many of them to subscribe to Caesars’ tender. It is “what management should have done in the first place,” said Roffman, who nevertheless praised Caesars as “the best-managed gaming company” he has seen.

“I will take any bet that (Sosnoff) will not make a (new) bid for the company,” Roffman said.

He said New Jersey authorities made it clear they will not stand by and permit a casino firm’s assets to be “leveraged up” with huge debt because of a hostile offer. Roffman said Sosnoff could not accomplish a billion-dollar offer without leveraging the assets.

Caesars’ stock closed Thursday at $30, up 37.5 cents, on the New York Stock Exchange. It had fallen from the $35 range after the New Jersey ruling and was trading just above $29 when Caesars made its tender offer.