Wynn ends talks with Crown

Wynn Resorts has ended its $10 billion takeover talks with the James Packer-backed Crown Resorts.

James Packer. Picture: NEMO/BACKGRID

Casino giant Wynn Resorts has walked away from its $10 billion takeover talks with the James Packer-backed Crown Resorts because of the “premature disclosure” of the engagement.

The Nasdaq-listed company had been in confidential talks with the Australian-listed casino company but an agreed bid had not been finalised.

Crown disclosed to the Australian market yesterday that it had been in discussion with Wynn about a “change of control transaction”, which would see Mr Packer — who has a 46.1 per cent stake in Crown — walk away with about $2bn and a 10 per cent stake in Wynn Resorts.

But Wynn Resorts has now ended those talks.

“Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” Wynn said in a statement.

Just prior to announcing it had ended the talks, Wynn had confirmed to the US market that it was in preliminary discussions with Crown.

“There is no assurance that these discussions will result in a transaction. Wynn does not currently intend to comment further on the potential transaction with Crown unless required by law,” Wynn said in the earlier statement.

The talks were believed to have been ongoing for sometime and involved a previous offer. Crown said yesterday its board had not yet considered the “most recent” proposal from Wynn.

“The proposal contemplates an acquisition of Crown by Wynn via scheme of arrangement for a combination of cash and Wynn shares,” Crown said in a statement to the Australian market yesterday.

“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.”

The deal had an implied value of $14.75 per share — a 26 per cent premium to Crown’s share price before the bid was announced. Shares in Crown closed 19.6 per cent higher at $14.05 on news of the deal.

Macquarie’s analysts said the timing of the proposal and subsequent implied multiple of the bid price was a surprise. The analysts said the bid implied a significantly higher multiple than the traditional trading ranges for Australian casinos.

Analysts at Bernstein said while it was “perplexed” as to why Wynn would be interested in acquiring Crown as an acquisition deviated from historical organic growth strategy, it saw there could be merit in an acquisition.

“There may be solid synergies with respect to Chinese customers,” the analysts said.

“We also see an acquisition as partly a possible defensive strategy for Wynn to fend off any potential acquirers.”

In a client note on the possible takeover, Bernstein’s analysts also said they would have some concerns if there was any material increase in offer price.