Wynn ends A$10 billion deal talks with Australia's Crown Resorts

 Wynn ends A billion deal talks with Australias Crown Resorts

(Reuters) - World's No. 2 casino operator Wynn Resorts Ltd on Tuesday scrapped its takeover talks with Crown Resorts Ltd, after details of its A$10 billion ($7.1 billion) takeover offer were leaked.

Earlier on Tuesday, Wynn confirmed that it was in talks after Crown Resorts disclosed that Wynn had offered A$14.75 per share to buy out the Australian casino operator in stock and cash, at a 26 percent premium to Crown's last close.

"Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction," the company said in a statement.

Wynn's shares were down 3.5 percent, while Crown Resorts shares closed nearly 20 percent higher at A$14.05 on the Australian Stock Exchange.

Crown was not immediately available for comment, following the termination outside business hours.

Australia's biggest casino chain Crown had earlier said the talks were at a preliminary stage, and that the companies had not agreed on a value or deal structure, adding that the proposal had not gone to the board.

For Wynn, the deal would have offered a hedge against Macau, the Chinese gambling hub where its licences are up for renewal, by giving it two lavishly revamped Australian casinos and a third being built on the prized Sydney harbour front.

Buying Crown would also fit in with Wynn's strategy to diversify geographically to protect its growth prospects if its Macau licences are not renewed.

The company's efforts so far have included ramping up promotion of a resort in Japan, a market seen as the next potential goldmine to Macau and a former expansion target for Crown.

"Wynn has typically grown through building their own facilities, not through acquisition," said David Bain, Roth Capital Partners analyst.

"Management's experience with acquisition is limited, so when you target synergies it'll be nice to have more of a track record for such a large transaction," he said, calling the termination a positive.

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 last year due to mental illness, the deal would have ended his career as a casino mogul with a A$4.7 billion payout.

He would have ended up as Wynn's biggest shareholder with 9.8 percent of its shares, based on its current number of shares on issue.

"We think Wynn's strategy was mostly defensive, but if they have a strong strategic rationale for wanting to acquire Crown, they would likely come back to the table when things settle down," said John DeCree, Union Gaming Securities' director of North America research.

($1 = A$1.40)

(Reporting by Byron Kaye, Tom Westbrook and Paulina Duran in SYDNEY and Devika Syamnath and Nivedita Balu in BENGALURU; Editing by Sriraj Kalluvila and Shounak Dasgupta)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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Updated Date: Apr 10, 2019 00:05:43 IST

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