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Wynn Resorts bids $7.1B deal for Australia-based gaming company

Updated April 9, 2019 - 12:45 am

UPDATE: Wynn Resorts has terminated discussions with Crown Resorts.

Wynn Resorts Ltd. is seeking to take over smaller, overseas rival Crown Resorts for $7.1 billion in one of the casino industry’s biggest transactions in years.

The surprise move might be an attempt by Wynn Resorts to stave off a takeover attempt amid a sexual harassment scandal that has hurt the company’s growth prospects, some analysts believe.

Las Vegas-based Wynn Resorts is offering to pay an even combination of cash and shares, the Melbourne-based operator said in a statement. Wynn Resorts spokesman Michael Weaver declined to comment.

Wynn’s offer values Crown’s shares at AU$14.75, about $10.50, a 26 percent premium to Monday’s close. Shares of Crown surged 20 percent Tuesday morning in Australia to AU$14.19.

“The Crown Board has not yet considered the most recent proposal from Wynn. 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 Resorts said in the statement.

Crown Resorts owns and operates Crown Melbourne Entertainment Complex and Crown Perth Entertainment Complex, two of Australia’s leading resorts. Crown Resorts also owns and operates Crown Aspinalls in London.

The acquisition would be the first by Wynn Resorts, whose CEO Matt Maddox is forging his own path since taking the helm from founder Steve Wynn in February 2018. Maddox last year canceled plans by his predecessor to invest billions in new projects in Las Vegas.

Wynn Resorts operates four casinos, including two in Las Vegas and two in Macau, and is building a fifth in Boston.

The bid for Crown Resorts comes as Wynn Resorts is trying to shake off a scandal that could cost the company its license in Massachusetts and hurt its chances to enter the massive Japanese gaming market.

The Massachusetts Gaming Commission is considering punishing the company for not disclosing sexual harassment allegations against Steve Wynn when it bid for a state gaming license in 2013. Wynn Resorts’ $2.6 billion Boston-area casino is expected to open in June.

Wynn Resorts said it plans to seek a gaming license in Japan when the Asian nation opens up the bidding process in the near future. Wall Street analysts have said that Las Vegas Sands and MGM Resorts have better chances of winning a Japanese license.

“Purely defensive”

Analysts began to speculate that Wynn Resorts could be a takeover target after Steve Wynn, who controlled about 20 percent of the company — including a stake belonging to his ex-wife Elaine Wynn — completely exited the company in March, 2018.

Wynn Resorts is one of just six resort operators with licenses in Macau, the world’s largest gambling province. That makes it an attractive acquisition target by operators seeking to enter the Chinese market.

However, a merger with Crown would make Wynn Resorts too big a target for many companies, Union Gaming said in a note late Monday.

‘’We suspect this move is part of a larger strategy for Wynn that is purely defensive. The Wynn Las Vegas and Macau assets are highly sought after. [An] Acquisition is likely the only way for a new entrant to gain exposure to Macau,” the brokerage said.

An ”unfavorable outcome” in the coming weeks in Massachusetts, including losing its license, could make Wynn again an attractive takeover target, Union Gaming said.

Contact Todd Prince at 702-383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.

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