Fri, Apr 12, 9:49am by Staff Writer
Crown Resorts and Wynn recently pulled out of sales talks, but investors aren’t convinced that James Packer’s 46 per cent stake in the casino and hotel group is off the takeover list.
Share Café is reported that Wynn Resorts bolted from the game on Tuesday after the deal was prematurely leaked to the Financial Review.
A 19.6 per cent share price surge on Monday followed in the wake of the news of Wynn’s approach and Crown’s confirmation of the terms of the deal – cash and shares worth around $14.75 a share.
Crown shares fell to $12.77 on Thursday, down 9.7 per cent, half of Monday’s big rise.
Reading between the lines, that reveals that investors reckon that while Wynn may not return (it has several regulatory hurdles in the US to get through for a casino in Boston), other casino companies from Asia might not be interested in taking a pass at Crown – and Star, its Sydney based rival for that matter.
Any takeover would be conditional on a raft of state and Federal regulatory and political approvals, including the endorsement of the Victoria, NSW and WA governments and their state regulators.
Under the Wynn proposal, Mr Packer would have emerged with about $2.2 billion in cash and around 9.8 per cent of Wynn’s shares.
Investment bank Credit Suisse said that while there was no major benefit to Wynn combining with Crown, “Australia is an attractive gaming market which has shown modest growth for 20 years, the highest per capita gaming in the world, and casinos that are mostly positioned as regional monopolies.”
In fact, Australia is over gambled with lotto, scratchies, lotteries, online betting on horses, dogs, trots, plus sport, illegal offshore betting sites and casinos.
It is a mature market and Crown and Star both have reported variable results in recent years, while Tabcorp’s most recent profit performance has been underwhelming.
The Sydney Morning Herald has reported explosive allegations that executives at Wynn Resorts had concealed allegations of sexual misconduct against the company’s founder, Steve Wynn, for years, if a report by Massachusetts casino regulators is to be believed.
The 200-page report by the state Gaming Commission doesn’t make a recommendation about the fate of the company’s Massachusetts casino licence or its nearly US$3 billion Boston-area resort slated to open in June.
It does conclude by saying that recent reforms touted by the company – including the resignation of Mr Wynn as chief executive officer and the ousting of every official who knew of the allegations but failed to report them – does not “erase the fact that the corporate failure revealed in this investigation are significant, repetitive and reflective of the company’s historical governance practices.”
Mr Wynn stepped down in February following the allegations.
— Jim Stevenson (@VOAStevenson) April 11, 2019
The board “reluctantly” accepted his resignation at the time, with the company remarking in a statement that they appointed Matt Maddox, its then president, as chief executive officer immediately.
“In the last couple of weeks, I have found myself the focus of an avalanche of negative publicity,” Mr Wynn said in a statement.
“As I have reflected upon the environment this has created – on in which a rush to judgment takes precedence over everything else, including the facts – I have reached the conclusion I cannot continue to be effective in my current roles.”
Wynn had been in the spotlight since the Wall Street Journal published a report in January that alleged he pressured employees for sex and paid US$7.5 million to settle claims brought by a former manicurist at his Las Vegas resort.
Wynn, 76, has denied any wrongdoing, calling the claims “preposterous” and saying they were instigated by his ex-wife to seek advantage in their divorce lawsuit.
His exist sets up a challenge for a company whose glamorous image has long been tied to its founder.
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