SYDNEY: Wynn Resorts Ltd is in talks to buy Australian billionaire James Packer’s Crown Resorts Ltd for A$9.99 bil (US$7.12 bil) as the Las Vegas casino empire looks for growth in Asia amid a slowdown in the gambling enclave of Macau.
The proposed deal, which values Crown at A$14.75 per share, 26% more than Monday’s closing price, will also allow Packer to divest his single largest asset, completing a remarkable corporate retreat for a titan who’s been beset by political trouble and mental health issues in recent years.
Crown shares soared yesterday in Sydney trading after the company confirmed confidential discussions, climbing 19.7% to close at A$14.05. Crown’s Australian rival Star Entertainment Group Ltd jumped 5.4%, while shares of New Zealand casino Skycity Entertainment Group Ltd rose 2%.
Wynn’s interest in Melbourne-based Crown, which is almost solely focused on its domestic market where big-spending VIP gamblers have become more elusive, seems unusual, but the Las Vegas-based empire is desperately seeking to shore up its presence among Asian bettors.
Unlike its competitors who already have footholds elsewhere in Asia - from Las Vegas Sands Corp’s Singapore resort to Melco Resorts & Entertainment Ltd’s City of Dreams in Manila - Wynn is currently confined to Macau, where expansion is approaching its limit. And they’re all fiercely competing for an operating license in Japan, the region’s next gambling goldmine.
“Wynn’s pursuit of Crown represents the need for Macau operators to expand in other markets to support long-term profit growth,” said Bloomberg Intelligence Asia gaming analyst Margaret Huang. But the deal will siphon off cash that Wynn could have used on a Japanese resort, estimated to cost up to US$10bil, and Australia’s weakened gaming demand is concerning, she said.
Union Gaming Group LLC analyst John DeCree said that the acquisition was likely a defensive move on Wynn’s part, in order that it not become a takeover target for rivals like Las Vegas Sands or MGM Resorts International.
“Not only would a larger enterprise be a more difficult target, but it would deter potential suitors as US-based peers have little to no strategic interest in Australia,” he wrote in a note.
Crown said in a statement that discussions 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.
There’s no certainty that the discussions will result in a transaction, the company added.
A Wynn spokesman declined to comment on the talks with Crown. — Bloomberg