GGRAsia – Wynn Resorts says ending takeover talks for Crown

Wynn Resorts says ending takeover talks for Crown

Apr 09, 2019 Newsdesk Latest News, Top of the deck, World

U.S.-based Wynn Resorts Ltd said on Tuesday it was ending talks on a potential deal to acquire Australia-based gaming operator Crown Resorts Ltd.

“Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” the firm said in a statement.

Earlier on Tuesday, Crown Resorts had confirmed the firm was in talks with Wynn Resorts regarding a potential takeover. “Crown confirms that it is in confidential discussions with Wynn regarding a potential change of control transaction following approaches to Crown by Wynn,” the Australian firm said in a release.

Crown Resorts’ confirmation followed a report on the deal by the Australian Financial Review, published on Monday.

It added: “The proposal contemplates an acquisition of Crown by Wynn via scheme of arrangement for a combination of cash and Wynn shares. The proposal currently contemplates acquisition consideration (50-percent cash and 50-percent Wynn shares) with an implied value of AUD14.75 [US$10.5] per share with the exchange ratio being fixed, using a volume weighted average price for Wynn shares, immediately prior to the announcement of an agreed transaction.”

Following Crown Resorts’ announcement, Wynn Resorts first said in a filing to the U.S. Securities and Exchange Commission that it was in “preliminary discussions” with the Australian casino operator.

Wynn Resorts stated at the time: “No agreement has been reached between the parties in relation to the structure, value or terms of a transaction.” The firm had added: “There is no assurance that these discussions will result in a transaction.”

A few hours after that filing, the U.S. firm announced it was ending talks with Crown Resorts.

Crown Resorts currently owns two casinos in Australia, namely in Melbourne and Perth. The firm also has development projects in Sydney and Melbourne. In addition, it operates a casino in London, in the United Kingdom.

Commenting on Wynn Resorts’ sudden termination of discussions with Crown Resorts, brokerage Sanford C. Bernstein Ltd stated that, “at this point, there’s no guarantee that any potential discussion around the deal will not resurface.”

Earlier on Tuesday, Sanford Bernstein had said in a separate note that a potential acquisition of Crown Resorts by Wynn Resorts could be “partly a possible defensive strategy for Wynn Resorts to fend off any potential acquirers.” Analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu added in that initial note: “Wynn Resorts’ Macau and Las Vegas assets are crown jewels in the gaming industry, and an acquisition of Wynn Resorts has been discussed by investors.”

Wynn Resorts has casino operations in the U.S. and in Macau. The Wynn organisation has expressed interest in running a casino in Japan once casino gambling is legalised there.