Wynn Resorts scotches potential takeover of Crown Resorts

Andrew Cummings
April 10, 2019

Australia-based gaming operator Crown Resorts Ltd confirmed on Tuesday the firm is in talks with USA -based Wynn Resorts Ltd regarding a potential AUD10-billion (US$7.1-billion) takeover.

In a tersely-worded statement, the Las Vegas company said it was ending negotiations with Crown Resorts.

News of Wynn's interest was first broken by Australian Financial Review on Tuesday and confirmed by Crown, which also disclosed Wynn's offer price.

A potential takeover deal was "subject to a number of conditions including due diligence, Wynn obtaining all necessary regulatory approvals and a recommendation by the Crown board", the document added.

Buying Crown would also fit in with Wynn's strategy to diversify geographically to protect its growth prospects if its Macau licenses are not renewed.

Crown said the talks with Wynn were at a preliminary stage and no agreement on value or structure had been reached.

A sale along the lines proposed by Wynn would be Australia's biggest M&A deal so far this year.

Wynn was proposing to buy the company half in cash, half in shares, and the current proposal had not gone to the Crown board.

Wynn's shares were down 3.5 percent after the termination, while Crown Resorts shares closed almost 20 percent higher at A$14.05, but below the proposed buyout price of A$14.75.

Its value had fallen 20 per cent since mid-2018, profits falling short of expectations.

Crown Perth is WA's biggest single-site employer with as many as 5000 people employed across the casino and its three hotels.

In 2016, 19 of its staff members were arrested in China on charges of illegally promoting gambling.

However, an agreed bid had not been finalised on the deal that would have seen Packer - who has a 46.1 per cent stake in Crown - walk away with about $2 billion and a 10 per cent stake in Wynn Resorts.

Founder Steve Wynn sold his entire stake in the Las Vegas-based firm after he stepped down earlier this year as chairman and chief executive in the wake of allegations of decades of sexual misconduct.

A court jailed 16 of the defendants, including three Australian citizens, for nine-to-10 months, with the remaining three released after a month in detention.

Wynn is best associated with its founder, United States billionaire Steve Wynn, who stepped down from his positions at the company a year ago and quit his shareholding after allegations of sexual misconduct.

Unlike its competitors who already have footholds elsewhere in Asia - from Las Vegas Sands Corp.'s Singapore resort to Melco Resorts & Entertainment Ltd.'s City of Dreams in Manila - Wynn is now confined to Macau, where expansion is approaching its limit.

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