Economy

James Packers’ Crown casino in takeover talks with Las Vegas’ Wynn Resorts

James Packers’ Crown casino in takeover talks with Las Vegas’ Wynn Resorts

Australia-based gaming operator Crown Resorts Ltd confirmed on Tuesday the firm is in talks with USA -based Wynn Resorts Ltd regarding a potential AUD10-billion (US$7.1-billion) takeover.

Crown had confirmed the talks overnight after the Australian Financial Review had reported on the potential deal Monday.

Crown has endured a turbulent three-year period in which it retreated from its expansion plans in Las Vegas and Macau, while 19 of its staff were arrested and jailed in 2017 for promoting gambling in China. It added that Crown's board had not yet considered Wynn's latest offer.

Wynn was proposing to buy the company half in cash, half in shares, and the current proposal had not gone to the Crown board.

Crown said the talks with Wynn were at a preliminary stage and no agreement on value or structure had been reached.

Wynn then issued two statements, first confirming the talks, and, a few hours later, stating that they had ended.

"Wynn's actions are more likely to reflect a genuine frustration with a breach of the confidential nature of the discussions than an attempt to add pressure to the negotiation", said Angus Gluskie, managing director of White Funds Management, which holds Crown shares. "There is no certainty that these discussions will result in a transaction", Crown said.

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That represents a 25.6 per cent premium to the stock's $11.74 price before trade was paused ahead of the announcement.

Crown's value has fallen 20% since mid-2018 as profits have fallen short of expectations.

However, an agreed bid had not been finalised on the deal that would have seen Packer - who has a 46.1 per cent stake in Crown - walk away with about $2 billion and a 10 per cent stake in Wynn Resorts. It has attributed the slump to slowing economic growth in China, where big gamblers who travelled to Australia are now less likely to be in the mood to gamble.

A sale would mark an end to Crown 47-percent owner James Packer's 12-year foray into casinos after he re-badged his father's media empire as a gambling concern in 2007.

Wynn Resorts is almost four times the size of Crown with a portfolio of casinos and hotels in Las Vegas and Macau. In February 2018, founder and former Chief Executive Officer Steve Wynn stepped down following reports that he sexually harassed a number of employees over his career.

Soon afterward, Crown signalled a retreat from worldwide expansion plans that included Las Vegas and Macau.

For Crown's 47-percent owner James Packer, who re-badged his father's media empire as a gambling concern in 2007 only to withdraw from business engagements previous year due to mental illness, the deal would have ended his career as a casino mogul with a A$4.7 billion payout.


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