Wynn Resorts Ltd is in talks to buy Australian billionaire James Packer’s Crown Resorts Ltd for A$9.99 billion (US$7.12 billion) as the Las Vegas casino empire looks for growth in Asia amid a slowdown in the gambling enclave of Macau.
The proposed deal, which values Crown at A$14.75 per share, 26 percent more than Monday’s closing price, would also allow Packer to divest his single largest asset, completing a remarkable corporate retreat for a titan who has been beset by political trouble and mental health issues in the past few years.
Wynn’s interest in Melbourne-based Crown, which is almost solely focused on its domestic market where big-spending VIP gamblers have become more elusive, seems unusual, but the Las Vegas-based empire is desperately seeking to shore up its presence among Asian bettors.
Unlike its competitors who already have footholds elsewhere in Asia — from Las Vegas Sands Corp’s Singapore resort to Melco Resorts & Entertainment Ltd’s City of Dreams in Manila — Wynn is confined to Macau, where expansion is approaching its limit.
They are all fiercely competing for an operating license in Japan, the region’s next gambling gold mine.
“Wynn’s pursuit of Crown represents the need for Macau operators to expand in other markets to support long-term profit growth,” Bloomberg Intelligence Asia gaming analyst Margaret Huang said.
The deal would siphon off cash that Wynn could have used on a Japanese resort, estimated to cost up to US$10 billion, and Australia’s weakened gaming demand is concerning, she said.
Union Gaming Group LLC analyst John DeCree said that the acquisition was likely a defensive move on Wynn’s part, in order that it not become a takeover target for rivals like Las Vegas Sands or MGM Resorts International.
“Not only would a larger enterprise be a more difficult target, but it would deter potential suitors as US-based peers have little to no strategic interest in Australia,” he wrote in a note yesterday.
Crown said in a statement that discussions 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 the discussions will result in a transaction, the company added.
If the parties come to terms, Wynn would be buying a company whose ambitions are in decline. Crown largely retreated from overseas markets after a crackdown in China in late 2016 that resulted in 19 current and former Crown staff being convicted of illegally promoting gambling in China, receiving jail terms of as long as 10 months.
The company has since closed almost all its regional marketing offices in Asia, which funneled big-stakes players to Australia, and sold out of a Macau casino venture.
The episode “shook me to the core,” Packer said in a rare interview with the Australian newspaper in October 2017.
He quit the board of Crown in March last year due to mental health issues and stepped down as a director of his private investment company.
In the 2017 interview, Packer also said he wanted a more “simple life” and acknowledged he had lost friends, put on weight and had led a reclusive life at his polo estate in Argentina.
Crown is now focused on its casinos in Perth and Melbourne and is building a new six-star hotel, residential and gaming venue in Sydney, which is due to be completed in 2021.
Under its current structure, the transaction would make Packer a significant shareholder in Wynn.
Packer’s private investment company, Consolidated Press Holdings, owns about 46 percent of Crown, so any deal hinges on Packer’s approval.
Wynn Resorts has had its share of high-profile trouble.
In February last year, founder and former CEO Steve Wynn stepped down following reports that he sexually harassed a number of employees over his career.
He has denied that any of his sexual relationships were non-consensual. He later sold all his holdings in the company.
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