Big Wynn? Vegas giant makes $7.1 billion play for Australia’s Crown

SYDNEY (Reuters) – World No. 2 casino operator Wynn Resorts created A$10 billion ($7.1 billion) takeover way of Australia's Crown Resorts, the target company said , hoping to expand its geographic reach mainly because it faces growth hurdles in Asia.

The deal would offer Wynn a hedge against Macau, folks gambling hub where its licenses are up for renewal, giving it two lavishly revamped Australian casinos as well as a third still being built for the prized Sydney harbor front.

For Crown 47-percent owner James Packer, who re-badged his father's media empire as the gambling concern in 2007 to withdraw from business engagements a year ago caused by mental illness, the offer would end his career to be a casino mogul by using a A$4.7 billion payout.

He would finish up Wynn's biggest shareholder with 9.8 percent of shares, according to its current amount of shares on issue.

Crown shares jumped 20 % to A$14.07 in afternoon trade Sydney following the announcement, their biggest intraday gain because the company re-listed having its current name 12 in years past. In spite of this, these were still under the indicative buyout expense of A$14.75 as a consequence of uncertainty about whether a package would eventuate.

"It's a preliminary-style bid which doesn't yet provide an adequate premium for control, and a lot of would expect there to get both more debate with regards to the strategic merit and pricing," said Angus Gluskie, md of White Funds Management, which holds Crown shares.

The deal, which could be subject to regulatory approval, could well be Australia's biggest M&A deal until now this season. The gambling regulator in Victoria, the placement of Crown's flagship casino, said it ought to be satisfied any new owner can be a suitable gambling operator.

Crown said Wynn was proposing to shop for the provider half in cash, half in shares. Talks were on a preliminary stage, nokia’s had not decided on a worth or deal structure, and current proposal had not been paid to the board, it added.

A Wynn spokesman declined to comment.

A spokesman for Consolidated Press Holdings, Packer's company which holds his Crown shares, was also not immediately accessible for comment.

TIMING

While Wynn offered a chunky 26 % premium to Crown's last share close, an offer would hand the Las Vegas-based company a once-formidable rival at a vulnerable moment.

Crown tore up its global expansion plans after 18 of its staff were arrested in China in 2019, and focused on shining up its Australian assets including casinos in Sydney, Melbourne and Perth. As part of that pull-back, it sold an e-casino development site in Las Vegas to Wynn for A$370 million.

Crown then faced a new challenge, by using a downturn in Chinese consumer spending crimping revenue from Chinese high-rollers at its Australian tables. Before news within the Wynn approach, its shares had fallen by using a fifth since August.

Macquarie Group analysts said they needed more details to know the results to Wynn, but "provided that no assets are collocated geographically, to be able to generate synergies is most likely connected with corporate cost benefits and VIP".

As well as its properties in the United States and Macau, Wynn during the last year has sought to diversify geographically to protect its growth prospects whether you have Macau licenses usually are not renewed. Already containing included ramping up promotion on the resort in Japan, the market known as the subsequent potential goldmine to Macau in addition to a former expansion target for Crown.

The U.S. company has witnessed a few shake-ups following sexual misconduct claims against former CEO Steve Wynn. The company's largest shareholder, Elaine Wynn, who co-founded the firm together ex-husband, is agitating for changes to the board.