SYDNEY: Australian casino giant Crown Resorts said on Tuesday it had received an indicative A$10 billion ($7.1 billion) takeover offer from Las Vegas's Wynn Resorts, sending Crown's shares soaring as investors bet on an even higher bid.
A sale would mark an end to Crown 47% James Packer's 12-year foray into casinos after he re-badged his father's media empire as a gambling concern in 2007. Packer quit the Crown board last year due to mental illness.
For Wynn, the deal would give the world's second-largest casino company a foothold in a market popular with Chinese tourists, although a recent downturn in Chinese consumer spending has constrained Crown's revenue and share price.
"Pricewise, you'd be looking for a little bit more than this," said James McGlew, executive director of corporate stockbroking at Perth-based Argonaut Ltd, a Crown shareholder.
"This is what appears to be the opening salvo."
A sale along the lines propsoed by Wynn would be Australia's biggest M&A deal so far this year.
Crown shares jumped 21 percent to A$14.19, their biggest intraday gain since the company re-listed with its current name. Even so, they were still below the indicative buyout price of A$14.75 due to uncertainty about whether a deal would eventuate.
"It's a preliminary-style bid which doesn't yet provide an adequate premium for control, and most would expect there to be both more debate about the strategic merit and pricing," said Angus Gluskie, managing director of White Funds Management, which also holds Crown shares.
Crown said the talks with Wynn were at a preliminary stage and no agreement on value or structure had been reached.
Wynn was proposing to buy the company half in cash, half in shares, and the current proposal had not gone to the Crown board.
A Wynn spokesman declined to comment.
A spokesman for Consolidated Press Holdings, Packer's company which holds his Crown shares, was also not immediately available for comment.
The sale at the current proposed price would fetch about A$4.7 billion for Packer, who in addition to Crown quit 22 company directorships last year in a remarkable retreat for the scion of a family which had been a fixture of corporate Australia most of the 20th century.
The deal would also provide some relief for Crown shareholders, who have seen their investment go sideways since late 2016 when 18 of the company's staff were arrested in China for breaking laws banning casino marketing.
Crown has since pulled back from its Asia expansion plans - where it had competed with Wynn in the world's biggest gambling destination of Macau - and instead relied on high-rolling Chinese tourists at home to grow profit.
The deal would put Wynn in charge of one of Australia's most high profile developments, a A$2.2 billion luxury casino precinct called Barangaroo on the Sydney waterfront, which Crown has pitched as its future growth engine.
Wynn has properties in the United States and Macau, but over the past year it has ramped up promotion of a resort in Japan, a market seen as the next potential goldmine to Macau and a former expansion target for Crown.
The U.S. company has seen a series of shakeups following sexual misconduct claims against former CEO Steve Wynn. The company's largest shareholder, Elaine Wynn, who co-founded the firm with her ex-husband, is agitating for changes on the board. - Reuters