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Tropicana: Value Still Left On The Table

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  • Icahn is offering $38 - $45 for 82% of the Tropicana shares he still does not control.
  • Price will very likely be priced at the upper limit for a 3.7% return in three weeks.
  • Special Situation Digest: our new marketplace service is on the way. Launch in early September.

Before we present the details of this investment, an apology is in order for the lack of activity on Seeking Alpha. We have been quite busy with some changes on Antão Capital’s structure and - more interestingly to the audience here - preparing the launch of our Special Situations Digest marketplace service here on Seeking Alpha, a place we hope to build to become the go-to place for ideas and discussion on the highest quality special situations available on the market. The launch will happen on early September, so stay tuned.

Now, on to the special situation du jour.

The following situation stems from our Tropicana Entertainment (OTCQB:TPCA) idea (Tropicana: Buy It While You Can) presented back in April.

At the time, we concluded our write-up saying that “We only see one possible outcome for Tropicana: to be taken private by Icahn”. Well, that was precisely what happened: on 23 June Icahn Enterprises IEP (Icahn’s investment vehicle) and Tropicana commenced a tender offer to purchase up to 5.58M shares of Tropicana in a modified Dutch auction for a minimum of $38 and maximum of $45 per share with the tender running through August 2.

If you followed our idea back in April the outcome has been a juicy ~40% return in roughly 2 months. The good news is that there is value still left on the table.

For context, Tropicana is an owner and operator of eight regional casino and entertainment properties, including lodging, dining, retail and entertainment. It has a very healthy balance sheet and has been experiencing nice growth. It is already 72.5% owned by IEP and Icahn is looking to take it private, firstly using Tropicana’s own money through buybacks and now through a tender offer.

Since the consideration for the tender offer is $38 to $45 and the

This article was written by

Antao profile picture
In 2014 João founded and currently manages Antão Capital, an investment fund focused on worldwide special situation and event-driven opportunities with an asymmetric risk/return profile, preferably with a near to medium term catalyst in place.

Analyst’s Disclosure: I am/we are long TPCA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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