United States casino giant Wynn ends takeover talks with James Packer's Crown Resorts

Roman Schwartz
April 10, 2019

Crown Resorts shares have soared after the casino operator confirmed talks with Wynn Resorts over a $10 billion takeover proposal by the Las Vegas gambling giant.

Wynn has now ended the discussions - with the company's executives apparently angered by Crown's decision to reveal the talks to the media.

The company has had some prior dealings with Wynn, having sold the company a 34.6-hectare parcel of land adjacent to Wynn Las Vegas on the Las Vegas Strip in December 2017 for AU$300 million.

Wynn appears to have been annoyed by public revelations confidential discussions were underway with Crown. Mr Packer quit the Crown board in March 2018.

Shares of Wynn were down 3.2 percent at $140.23 at mid-morning in NY.

"The proposal now contemplates acquisition consideration with an implied value of AU$14.75 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", Crown explained.

"The discussions between Crown and Wynn are at a preliminary stage and no agreement has been reached between the parties in relation to the structure, value or terms of a transaction", Crown said in a statement.

Wynn then issued two statements, first confirming the talks, and, a few hours later, stating that they had ended.

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

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

The deal would put Wynn in charge of one of Australia's most high profile developments, a A$2.2 billion luxury casino precinct called Barangaroo on the Sydney waterfront, which Crown has pitched as its future growth engine.

Crown, too, has battled controversy in the past three years.

Crown Resorts confirmation followed a report on the deal by the Australian Financial Review, published on Monday. The Chinese Government, which deems gambling illegal, released the staffers and fined Crown $1.67m.

The company's efforts so far have included ramping up promotion of a resort in Japan, a market seen as the next potential goldmine to Macau and a former expansion target for Crown.

That represents a 25.6 per cent premium to the stock's $11.74 price before trade was paused ahead of the announcement.

For Crown's 47-percent owner James Packer, who re-badged his father's media empire as a gambling concern in 2007 only to withdraw from business engagements past year due to mental illness, the deal would have ended his career as a casino mogul with a A$4.7 billion payout.

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