Australia’s largest casino operator, the James Packer-backed Crown Resorts, is in discussions regarding a potential takeover by the Las Vegas-based casino giant Wynn Resorts.
Crown confirmed a report in the Financial Review and analysts reckon the deal could value Crown at up to $10 billion, of which James Packer would grab around $4.6 billion for his 46% in Crown.
Crown is considering a cash-and-scrip offer with an implied value of $14.85 a share, it has been revealed.
The statement yesterday referred to the “most recent” proposal, indicating there was an earlier price offered.
“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,” the company said in a statement on Tuesday.
“The Crown board has not yet considered the most recent proposal from Wynn. There is no certainty that these discussions will result in a transaction,” the company said.
Up till yesterday shares in Crown Resorts had fallen nearly 20% since mid-2018. They closed at $11.74 on Monday. They jumped 19.6% to $14.05 yesterday, meaning there is no sign of a counter offer.
Wynn’s shares are volatile, ranging from $US92 late last year to $US144.85 on Monday.
It has a market cap of just over $US15 billion or just over $A21 billion, so paying just over $A10 billion for Crown is a big risk.
No wonder Wynn is offering cash and shares – cash would be a winning deal, offering Wynn shares is uncertain because if Australian shareholders in Crown want exposure to offshore casinos, they can already buy Wynn shares in the market.
Offering Wynn shares to Crown shareholders isn’t compelling.
Wynn most recent high was $US201 in May last year, after the group’s founder, Steve Wynn was forced to resign as executive chairman and sell all his Wynn shares after a string of sexual misconduct allegations.
Wynn operates a casino in Las Vegas, two in Macau (where Crown had a stake in a casino before selling out) and is building another in Boston.
Crown has casinos in Melbourne and Perth and the Sydney development at Barangaroo which is behind schedule and reportedly over budget.
