Crown Resorts remains a takeover target despite Las Vegas suitor walking away
Crown Resorts remains “in play” as a takeover target despite its Las Vegas suitor abruptly walking away from buyout talks, analysts say.
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CROWN Resorts remains “in play” as a takeover target despite its Las Vegas suitor abruptly walking away from buyout talks, analysts say.
Close to $870 million has been wiped form the value of Crown after Wynn Resorts announced it was no longer pursuing a $10 billion takeover of the Melbourne-based gaming giant.
Shares in Crown, backed by billionaire James Packer, tumbled by more than 9 per cent yesterday.
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The casino giant has given investors a wild ride this week, surging by close to 20 per cent on Tuesday after announcing it was holding discussions with Wynn about a takeover.
InvestSmart strategist Evan Lucas said Crown had shown it was open to selling, which meant further offers could emerge.
“There is no doubt that Crown remains in play,” Mr Lucas told Business Daily.
“Crown is clearly showing it is out there negotiating fairly actively to sell itself, which explains why we haven’t seen a complete reversal of Monday’s 20 per cent (share price) jump.
“Crown is on the table — that is an absolute given.”
Mr Lucas said although Wynn had walked away, it did not mean it would not return.
Investment bank Macquarie has lifted its share price forecast on Crown.
“We would expect Crown Resorts to trade at a premium … with the recent takeover proposal from Wynn Resorts possibly bringing another suitor to the table,” gaming analyst David Fabris said in a note to clients.
Mr Fabris said Asian casino operators Galaxy Entertainment and Genting — both of which have large VIP businesses — might now take a look at Crown.
Wynn could also return but a higher bid “looked challenging” given its tie-up with Crown would produce around $70 million in annual cost savings and efficiency gains which appeared to have been fully priced into its last offer, Mr Fabris said.
The Las Vegas Sands Corporation, whose properties include Singapore’s Marina Bay Sands casino, is viewed by analysts as another potential buyer.
Wynn, which runs casinos in Las Vegas and Macau, announced early yesterday morning it had terminated its talks with Crown as they had become public.
The move to walk away from a deal followed Crown revealing on Tuesday it had received a buyout offer.
“Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” Wynn said in a statement.
The Las Vegas-based company, co-founded by US casino developer Steve Wynn, had offered to buy Crown in a deal which valued the target at $14.75 a share.
The offer, which was evenly split between cash and shares, valued Mr Packer’s stake at $4.67 billion.
Crown has operations in Melbourne, Perth and London, and a luxury resort development in Sydney’s Barangaroo due to be completed in 2021.
Any deal would need to be signed off by the Victorian Commission for Gambling and Liquor Regulation, while a foreign buyer would also need approval from the Foreign Investment Review Board.
Shares in Crown fell 9.1 per cent yesterday to close at $12.77.
Its share price remains 8.8 per cent higher for the week, adding close to $700 million to its market capitalisation.
Mr Packer’s near 47 per cent stake is up by more than $320 million since Monday.
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