Skift Take

Perhaps more important than who might eventually wind up buying Wynn is what a buyer would have to do with the brand's tarnished image.

Two months after Steve Wynn resigned from the casino and resorts empire that he built, potential suitors may be circling Wynn Resorts.

The New York Post this week reported that MGM Resorts International may be interested in purchasing the embattled company and that new Wynn CEO Matt Maddox would be tempted to sell for the right price.

The report contradicts statements made by MGM Resorts CEO James Murren in February. At the time, Murren said it would be unlikely that Wynn Resorts, with a market cap of $18.6 billion, would be the next big “megadeal” in the gaming and hospitality sector.

Wynn has not had any discussion with MGM or its advisors about a sale of the company, said a Wynn spokesman.

However, as some financial experts have noted, including CNBC’s and The Street’s Jim Cramer, Wynn Resorts could be an attractive buy for a company like MGM or another competitor, Las Vegas Sands Corp.

What makes Wynn particularly attractive is its operations in Asia, especially in Macau. About 70 percent of Wynn Resorts’ earnings before interest, taxes, depreciation, and amortization come from its operations in Macau, some analysts estimate.

After the tumult that followed Wynn’s resignation amid multiple allegations of rampant sexual harassment of employees, Cramer and Wall Street analysts do believe the company’s recent actions suggest it could be preparing itself for a potential sale.

“I just think that they’re cleaning everything up,” Cramer said in early March. “The obstacles that it would take to buy this company ae being cleared up.” Cramer said the likely buyers would be MGM or Sands.

“The health in this [gaming] industry is staggering,” Cramer said in early March. “The fact is that Steve Wynn built the best company in the industry. Is the company as good without Steve Wynn? No, that’s not possible. But it does not mean that the bones aren’t there. He built some beautiful properties and someone else is going to reap the advantages. It must be killing the guy.”

Whether MGM or another gaming competitor, such as Sands, does make a bid for Wynn Resorts, any potential buyer will have to weigh the pros and cons of buying a company like Wynn — and inheriting a brand that shares the name as its now infamous founder.

Another challenge for potential buyers such as MGM and Sands is the risk they take in choosing to buy Wynn over bidding for contracts to operate integrated resorts in Japan — a relatively new market for U.S.-based casinos.

“Our view has been that MGM and Sands are the two best operators to receive a license to operate an integrated resort in Japan,” Morningstar analyst Dan Wasiolek noted. To do so could cost each company as much as $10 billion, however.

UPDATED: This story was updated to include comments from Morningstar analyst Dan Wasiolek.

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Tags: las vegas sands, mgm, wynn

Photo credit: Wynn Palace in Macau. Following founder Steve Wynn's resignation as CEO, Wynn Resorts may be an attractive purchase for its competitors such as MGM Resorts or Las Vegas Sands. 272348

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