Wynn Resorts in talks to buy Australia's Crown Resorts

Business | 9 Apr 2019 1:20 pm

Las Vegas casino giant Wynn Resorts is in talks to buy Australia’s largest casino operator, Crown Resorts.

Crown, which owns casinos in Melbourne, Perth and London and will soon open another in Sydney, confirmed in a statement on Tuesday it was in confidential takeover discussions over a cash-and-scrip offer from Wynn.

It said the offer had an implied value of US$10.50 ($14.75 AUD) per share, to be paid 50 percent in cash and 50 percent in Wynn shares. The offer values Crown at around US$7.83 billion ($10 billion AUD).

Stressing there was “no certainty that these discussions will result in a transaction,” Crown said the proposal was subject to conditions including regulatory approvals.

Crown’s value has fallen 20 percent since mid-2018, amid lower-than-expected profits, attributed by company executives to a decrease in spending from wealthy Asian gamblers amid China’s declining economic growth rates and its ongoing trade tensions with the United States.

But news of the talks sparked a 20.5 percent share price rise on the Australian Stock Exchange this morning, to US$10.07 ($14.14 AUD).

In its statement, Crown said: “The proposal is subject to a number of conditions including due diligence, Wynn obtaining all the necessary regulatory approvals and a recommendation by the Crown board. It is stated to be preliminary, confidential, non-binding and indicative.

“The Crown board has not yet considered the most recent proposal from Wynn.”

Wynn Resorts runs several casinos in the United States and Macau. Its founder, Steve Wynn, resigned as chairman and chief executive in February last year after claims of sexual misconduct, and has sold his stake in the company.

Crown, too, has battled controversy in the past three years. In 2016, 19 of its staff members were arrested in China on charges of illegally promoting gambling. A court jailed 16 of the defendants, including three Australian citizens, for nine-to-10 months, with the remaining three released after around a month in detention.

Soon afterward, Crown announced a momentous retreat from international expansion plans centered on Las Vegas and Macau, which led to a US$263.51 million ($370 million AUD) deal to sell Wynn vacant land in Las Vegas on which Crown had planned to build a casino.

And in March last year, Crown’s billionaire director James Packer resigned from the company’s board, citing mental health issues.

Packer still owns 46.8 percent of the company.

Crown said Goldman Sachs and UBS were acting as its financial advisers over the talks with Wynn, with law firm Ashurst acting as legal adviser.-AP

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