James Packer’s Crown, Wynn Resorts in talks over $10bn merger
James Packer eyes a $2bn payday as Crown Resorts enters merger talks with Las Vegas casino giant Wynn.
James Packer-backed Crown Resorts is in talks with Las Vegas casino giant Wynn Resorts about a potential $10 billion merger. Crown issued a statement to the ASX on Tuesday morning.
“Crown confirms that it is in confidential discussions with Wynn regarding a potential change of control transaction following approaches to Crown by Wynn,” the statement said.
“The proposal contemplates an acquisition of Crown by Wynn via scheme of arrangement for a combination of cash and Wynn shares.”
At $14.75 per share - a 26 per cent premium to Crown’s current share price - the proposed deal values the Australian gaming group at $10bn.
Crown shares jumped 22 per cent to a seven-month high of $14.33 following the news.
It is understood that Mr Packer would receive about $2 billion in the deal and about a 10 per cent stake in the merged entity.
Goldman Sachs and UBS are acting as financial advisers and Ashurst as legal adviser to Crown, the company said.
If an agreement proceeds, it would be Mr Packer’s first big deal for a number of years. It would also give him renewed exposure to global gaming markets, including Macau.
Crown said its board “has not yet considered the most recent proposal from Wynn.
“The discussions between Crown and Wynn 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 is no certainty that these discussions will result in a transaction.”
The talks come as Crown is halfway through developing its $2 billion Sydney casino and as VIP numbers at its flagship Melbourne casino and its Perth property ease.
Crown Resorts reported a fall in its VIP turnover at its half year result in February, flagging that while it had a “reasonable” number of visitors from China, their spending was down.
The Australia casino company has had a volatile few years, druing which it has dealt with the detention of staff in China and an exit from its overseas interest.
Mr Packer’s casino empire had surprised the market in December 2017 with news of several transactions underway to reduce its exposure to international assets and non-casino interests. The $700 million in asset sales included its Las Vegas property and also two floors of its Sydney project to Mr Packer for his future Australian home.
Mr Packer had long held ambitions for a successful Las Vegas project and in 2014 Crown bought that land, which was next to a casino owned by Steve Wynn.
Wynn resorts founder and former chief executive Steve Wynn was one of the architects of modern Las Vegas. He resigned from the company in March amid allegations of sexual harassment.
Since then, Wynn Resorts has continued to operate casinos in Las Vegas and Macau and planning to open a new casino in Massachusetts.
The company’s role over the handling of the allegations are currently being investigated Massachusetts gaming regulators.
Mr Wynn issued a statement to regulators saying he had never had a non-consensual relationship.
The Nasdaq-listed Wynn Resorts is capitalised at $US15.7 billion ($22.3 billion) and last calendar year posted operating revenue of $US6.72 billion and a net profit of $US803 million.
Crown’s cost-cutting drive came after the company paid a heavy price following the arrests in 2016 of its staff in China — a move that hit its lucrative VIP business. It also exited its Macau interests after the China arrests and then also became cool on previous plans to push for a casino licence in Japan.
Mr Packer stood down from the board in March 2018 citing mental health reasons. He had previously stepped down from the Crown board at the end of 2015, returning in August 2017
With Chris Jenkins
More Coverage
R.M. Williams digs heels in over Adelaide rental dispute
R.M. Williams is facing a legal stoush in its spiritual home of Adelaide with its former landlord taking it to court for about $200,000 in disputed rent and other costs.
Gupta’s woes spread to NSW as coal workers stood down
Workers at Tahmoor Coal in NSW have been stood down on full pay and production curtailed, as rumours swirl that Sanjeev Gupta’s debt worries have spread beyond Whyalla.