Wynn Resorts has abandoned Crown Resorts buyout talks after news of the takeover leaked to the media. The Vegas casino behemoth said it was ending all discussions with Crown Resorts. The potential $7.1 billion buyout was ended abruptly after news of the deal leaked prematurely.
Yesterday, talks of Wynn’s potential Crown takeover made the news globally, even though it was made clear that neither company had reached an official agreement. However, Wynn spokesman Michael Weaver said in his statement, “Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction.”
Crown Resorts reported that it was in preliminary discussions with Wynn Resorts over a $7.1 billion offer in cash and shares. News of the talks resulted in a 20% rise in Crown’s share price on the Australian Stock Exchange on Tuesday morning.
Even though Crown stressed that there was “no certainty that these discussions will result in a transaction,” and that the proposal depended on regulatory approval, Wynn balked and walked away from negotiations.
The Proposed Deal
After Wynn’s expansion into the Asian market went stale, the casino giant began negotiations in Australia for the first time. The planned deal would have resulted in Wynn buying out 2 of Crown’s luxury properties, along with a third property under construction in Sydney harbor.
The price of $7.1 billion was planned to be a 50/50 purchase in cash and shares. James Packer owns 47% of Crown resorts, which he took over from his late father in 2007. He stepped down as company chief citing mental health issues, but the deal would have given Packer a $4.7 billion payout if it had gone through.
Crown Resorts owns Crown Melbourne, Crown Perth, and is currently developing its AU$2.2 billion Crown Sydney at Barangaroo, which is due to open in 2021. The company also owns and operates Crown Aspinalls in London. Crown has had prior dealings with Wynn involving land purchase in Las Vegas. Crown sold Wynn a 34.6-hectare parcel of premium Las Vegas Strip land in 2017 for AU$300 million after their Vegas building plans went belly up.
Wynn or Lose
Wynn Resorts Ltd. owns several casinos in the U.S. and Macau. Company owner Steve Wynn resigned his position in the company in February 2018 after claims of sexual misconduct. Wynn also sold his stake in the company. The upheaval in the Wynn company resulted in setbacks in company expansion in Massachusetts and Macau. Wynn currently operates 4 casinos, including 2 in Las Vegas and 2 in Macau.
The company’s new CEO, Matthew Maddox, continues with casino expansion plans despite setbacks. He has also assured Gaming Commission officials that his company is taking steps to prevent sexual harassment in the future. Maddox has canceled his predecessor’s plans to invest billions in new Las Vegas projects in favor of pursuing international expansion opportunities.
Crown has also had its share of troubles, including a 20% drop in share values in 2018. Company officials attributed the slump to sluggish economic growth in China, which resulted in a shortage of Chinese high rollers visiting Australia to gamble.
In addition to its economic trouble, Crown had 19 of its staff members arrested in China in 2016. The Chinese court jailed 16 defendants on charges of illegally promoting gambling in China. Three of the 19 were released after one month, but the 16 convicted Crown staff members spent 10 months in jail. Three of the 19 were Australian citizens.
The resulting scandal quashed Crown’s expansion plans for Las Vegas and Macau, and prompted the $263-million Vegas land sale to Wynn. The site was previously purchased by Crown to build an integrated resort concept to be named Alon Las Vegas.