Wynn Makes $7.1 Billion Play For Australia’s Crown

Business

Wynn Resorts, the world’s second-largest casino operator made a takeover bid for Australia’s Crown Resort at A$10 billion. This takeover bid was made on Tuesday by Wynn Resorts in the hope of expanding its geographical reach as it continues to face growth troubles in Asia.

The deal would give Wynn a step up Macau, a Chinese gambling hub, where the casino’s licenses need to be renewed, by offering two extravagant Australian casinos along with a third one being built on the Sydney harbour front.

James Packer, co-owner of Crown Resort with a 47 per cent stake, re-packaged his father’s empire in 2007 and withdrew from business related engagements in 2018 as a result of mental illness. This deal would probably end his career with an A$4.7 billion payout as a casino mogul. The deal will also make him the biggest shareholder of Wynn Resort with a 9.8 per cent stake.

Crown shares went up 20 percent to A$14.07after the takeover bid announcement was made public. This jump was the highest intraday gain seen since Crown relisted 12 years ago with its current name. Even then, the share price remained lower than the indicative buyout price of A$14.75 because of uncertainty about whether the deal would go through or not.

According to Angus Gluskie, the managing director of White Funds Management, this bid is considered to be a preliminary style as it does not offer an adequate premium for control yet. He also expects plenty of debate about the pricing as well as the strategic merit of the deal.

The deal, if it goes through, will be the country’s biggest M&A deal this year. The gambling regulator in Victoria, where the Crown’s main casino is located, needs to be satisfied that the new owner will be a suitable gambling operator.

Crown also announced that Wynn has proposed to purchase the company half in shares and half in cash. It also added that the talks were in its initial stage and that the companies had not yet decided on a deal structure or value, the current proposal has not gone to the bard either.

This deal would allow the Las Vegas-based company a chance to take over a once formidable rival.

In 2016, Crown stopped its expansion plan after eighteen of its staff was arrested in China. The company shifted its focus to its casinos in Australia cities including Melbourne, Sydney and Perth. It even sold its casino development site in Las Vegas from A$370 million to Wynn.

Mary Conn

Mary Conn

Mary Conn has been a news writer for last 10 years. Recently she joined FinanceThrive team as a news editor. She regularly contributes in-depth news articles of finance industry covering personal & government financing, investment, business, economy and stock market.

Read Previous

Falling Chip Prices and Disappointing Smartphone Sales Threaten Samsung’s First Quarter Earnings

Read Next

UK House Prices Show Improvement For First Time In 8 Months

Leave a Reply

Your email address will not be published. Required fields are marked *