Did leak over Wynn wreck Packer plans for Crown gaming exit?

James Packer has revealed his hand as a seller of Crown Resorts. Pic: Nemo/Backgrid

Wynn Resorts’ abrupt decision to terminate talks with Crown just hours after they were revealed and confirmed leaves the Australian casino operator in the worst of all possible positions.

Major shareholder James Packer has revealed his hand as a seller of Crown Resorts but now finds himself without a buyer.

Earnings are under pressure as high-priced refurbishments and extensions of its Melbourne and Perth properties face a downturn in VIP turnover and it is in the middle of developing the Sydney project at Barangaroo.

There are also a host of questions left unanswered by the extraordinary 18 hours or so between a newspaper leak revealing Wynn’s interest in a Crown bid on Tuesday morning and the suitor issuing a terse online statement that talks had been “terminated” due to “premature disclosure” of what were said to be preliminary discussions.

Just hours before pulling the plug, Wynn made a statement to the NASDAQ confirming the talks.

Who leaked the deal and what did they hope to achieve by it?

If it was a leak designed to force the hand of a cautious bidder, it has blown up spectacularly.

Wynn walked away because of the leak.

Ditto if the leak was trying to get an auction going.

Crown shares were duly placed in a trading halt and statement issued that detailed the price of the offer - $14.75 in cash and shares, based on the value of Wynn’s US listed shares and the implied exchange ratio.

Crown noted that there were conditions to be satisfied, including due diligence, regulatory approvals and a recommendation from the board.

But even with the standard disclaimer that discussions were at a preliminary stage, the statement gives the impression of events being at a relatively advanced stage.

Wynn’s initial statement was a lot more cautious than Crown.

It read: “On April 8, 2019, Crown Resorts Limited issued a press release confirming that it is in confidential discussions with Wynn Resorts, limited regarding a potential change of control transaction. Wynn confirms that it is in preliminary discussions with Crown. No agreement has been reached between the parties in relation to the structure, value or terms of a transaction. There is no assurance that these discussions will result in a transaction.”

There may be a genuine question here about the tension between what is required by continuous disclosure rules for listed companies in Australia and the way Americans like to conduct their takeovers.

Revelation of the deal forced a trading halt in Crown stock and a statement that at least looked to have been more than hastily put together in response to an unwanted breach of confidentiality in the discussions.

The best that can be said is that the deal has set a benchmark for what the Crown board - and its major shareholder - thinks would be an acceptable price.

Wynn’s $14.75 indicative offer was a hefty 26 per cent above the pre-bid price and sent Crown shares rocketing from $11.74 to $14.05.

After Wynn’s statement overnight they were today back down to $12.80, having given up a bit more than half their gains.

Packer might want out of the casino business.

But after this episode it might take a little longer than he’d like.