Skift Take

It's likely that Wynn's cold feet about the Crown Resorts deal had more complex origins than the mere public disclosure of talks under way. Wynn wants to expand in Asia beyond Macau so it ain't over until the lights go out.

Wynn Resorts Ltd. abruptly ended talks to buy Australian billionaire James Packer’s Crown Resorts Ltd. for A$9.99 billion ($7.13 billion), just a few hours after the discussions were made public.

Wynn said in a statement Tuesday that it ended the talks “following the premature disclosure of preliminary discussions.” Crown had confirmed the talks overnight after the Australian Financial Review had reported on the potential deal Monday.

Buying Crown would have given the Las Vegas casino empire a new market for growth amid a slowdown in the gambling enclave of Macau. But Wall Street expressed skepticism about the potential deal. The prospect, while “perplexing,” might have some merit, Sanford C. Bernstein analyst Vitaly Umansky wrote in a note. Union Gaming Group LLC analyst John DeCree said the move seemed “purely defensive.”


“At this point, there’s no guarantee that any potential discussion around the deal will not resurface,” Umansky said in a note after Wynn’s termination announcement.

Wynn shares fell as much as 4.7 percent, the most since Feb. 14, in New York trading Tuesday. Crown rose 20 percent Tuesday in Sydney; the news of the abandoned talks came after the close of trading there.

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, seemed unusual, but it spoke to the Las Vegas-based empire’s keen desire 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 currently confined to Macau, where expansion is approaching its limit. And they’re all fiercely competing for an operating license in Japan, the region’s next gambling goldmine.

Yet Wynn would have been buying a company whose ambitions are in active 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 on the mainland, receiving jail terms of as long as 10 months.

“Wynn’s efforts to stretch its Asia reach beyond Macau may hinge on winning a Japan gaming license after it withdrew a $7.2 billion bid for Australia-based Crown. … Wynn would have gained favorable exposure to Crown’s Sydney resort, opening in 2021, but would have had to contend with Australia’s weak VIP betting trade.”

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, a national newspaper, in October 2017. He quit the board of Crown in March 2018 due to mental health issues and stepped down as a director of his private investment company.

Wynn Resorts, too, has had its share of high-profile trouble. 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. He has denied that any of his sexual relationships were nonconsensual. He later sold all his holdings in the company.

–With assistance from Angus Whitley and Daniela Wei.

©2019 Bloomberg L.P.

This article was written by John J. Edwards from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected]

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Tags: australia, crown resorts, gaming, m&a, macau, mergers and acquisitions, wynn resorts

Photo credit: Wynn Resorts said it is no longer interested in tying up with Australia's Crown Resorts. Bloomberg