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Crown confirms US$7.1bln Wynn Resorts takeover talks

Apr 09, 2019 Newsdesk Latest News, Top of the deck, World  


Crown confirms US$7.1bln Wynn Resorts takeover talks

Australia-based gaming operator Crown Resorts Ltd confirmed on Tuesday the firm is in talks with U.S.-based Wynn Resorts Ltd regarding a potential AUD10-billion (US$7.1-billion) takeover. The announcement led to a double-digit jump in price in the shares of Crown Resorts, a firm listed on the Australian Securities Exchange.

“Crown confirms that it is in confidential discussions with Wynn regarding a potential change of control transaction following approaches to Crown by Wynn,” the Australian firm said in a release.

It added: “The proposal contemplates an acquisition of Crown by Wynn via scheme of arrangement for a combination of cash and Wynn shares. The proposal currently contemplates acquisition consideration (50-percent cash and 50-percent Wynn shares) with an implied value of AUD14.75 per share with the exchange ratio being fixed, using a volume weighted average price for Wynn shares, immediately prior to the announcement of an agreed transaction.”

The filing stated that Crown Resorts’ board had “not yet considered” the “most recent proposal” from Wynn Resorts. Crown Resorts added that the tabled proposition was “preliminary, confidential, non-binding and indicative.”

A potential takeover deal was “subject to a number of conditions including due diligence, Wynn obtaining all necessary regulatory approvals and a recommendation by the Crown board,” the document added.

Crown Resorts confirmation followed a report on the deal by the Australian Financial Review, published on Monday.

“The discussions between Crown and Wynn 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,” Crown Resorts stated in its Tuesday announcement. “There is no certainty that these discussions will result in a transaction,” it added.

The firm stated investment banks Goldman Sachs and UBS were acting as its financial advisers on a potential takeover by Wynn Resorts, with multinational law firm Ashurst providing legal advice.

Crown Resorts is controlled by Australian billionaire James Packer. It was announced in March last year Mr Packer was resigning from the casino operator’s board “for personal reasons.”

According to local media reports, a spokesman for Mr Packer’s private investment company, Consolidated Press Holdings Pty Ltd, said at the time Mr Packer was “suffering from mental health issues”.

Consolidated Press Holdings is the largest shareholder of Crown Resorts. The privately held company has a 47-percent stake in Crown Resorts, according to media reports.

Crown Resorts currently owns two casinos in Australia, namely in Melbourne and Perth. The firm also has development projects in Sydney and Melbourne. In addition, it operates a casino in London, in the United Kingdom.

Until May 2017, Crown Resorts was an investor alongside Hong Kong-listed Melco International Development Ltd in Macau-based casino operator Melco Resorts and Entertainment Ltd – known at the time as Melco Crown Entertainment Ltd – before a series of stock sell-downs by the Australian partner.

Also in 2017, Crown Resorts announced it was abandoning plans to develop a casino and hotel project named “Alon” at the northern end of the Las Vegas Strip in the Nevada, U.S. gambling hub. The company said at time it was to sell to a subsidiary of Wynn Resorts Ltd, Crown Resorts’ interest in a 34.6-acre (14-hectare) vacant site on Las Vegas Boulevard, for US$300 million.

Wynn Resorts has casino operations in the U.S. and in Macau. The Wynn organisation has expressed interest in running a casino in Japan once casino gambling is legalised there.

Wynn Resorts has underwent a number of leadership changes since February last year, following the downfall of the firm’s founder and former chairman and chief executive Steve Wynn, amid allegations of sexual misconduct.

The overhaul included the appointment of Phil Satre as company chairman, and the appointment of Mr Maddox as chief executive. Several of those changes also had an impact on the leadership structure of its Wynn Macau subsidiary.


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