Investors aren’t convinced that Crown Resorts, the 46% casino and hotel group controlled by James Packer, isn’t off the takeover play list.
Yes, Wynn Resorts bolted from the game overnight Tuesday after the deal was prematurely leaked to the Financial Review.
But after the 19.6% surge on Monday in the wake of the news of the Wynn approach and Crown’s confirmation of the terms of the deal – cash and shares worth around $14.75 a share.
Crown shares fell to $12.77 yesterday down 9.7%, half Monday’s big rise.
That tells us that investors reckon that while Wynn may not return (it has several regulatory hurdles in the US to get through for a casino in Boston), other casino companies from Asia might now be interested in taking a pass at Crown – and Star, its Sydney based rival for that matter.
Any takeover would be conditional on a raft of state and Federal regulatory and political approvals, including the endorsement of the Victoria, NSW and WA Governments and their state regulators.
The ACCC would look at the deal (there shouldn’t be many problems given there is plenty of competition in gambling, especially in NSW).
The big question is whether any secretive federal based crime monitoring bodies become involved. given the attractiveness of casinos to would be money launderers.
Under the Wynn proposal, Mr. Packer would have emerged with about $2.2 billion in cash and around 9.8% of Wynn’s shares.
Investment bank Credit Suisse said that while there was no major benefit to Wynn combining with Crown, “Australia is an attractive gaming market which has shown modest growth for 20 years, the highest per capita gaming in the world, and casinos that are mostly positioned as regional monopolies”.
In fact, Australia is over gambled with lotto, scratchies, lotteries, online betting on horses, dogs, trots here and offshore, plus sport, illegal offshore betting sites, casinos. There are TABs, clubs, and pubs full of poker machines, as are the casinos owned by Crown, Sky City and Star.
In fact, it is a pretty mature market and Crown and Star both have reported variable results in recent years, while Tabcorp’s most recent profit performance has been less than stellar with wagering (on horses etc) falling.
