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Crown sale off the table as Wynn pulls out

Thu, Apr 11, 9:16am by Staff Writer

The $10 billion proposed bid for Crown Resorts by US gaming giant Wynn Resorts survived only 24 hours before Wynn killed it off, citing its premature disclosure as the motivation for walking away, the Sydney Morning Herald reports.

In a terse statement issued just hours after the companies confirmed they were in talks, Wynn Resorts said it was ending discussions with its Australian rival.

“Folliwng the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” the company said in a statement on Tuesday morning in the US.

Crown Resorts is controlled by Australian billionaire James Packer, who earlier issued a statement saying Wynn had proposed to buy the company in a $10 billion cash and stock deal.

Wynn also released an SEC filing on Tuesday to say that Crown Resorts had issued a press released “about confidential discussions”.

Wynn and Crown, and propbably more particularly Wynn and James Packer, had clearly had confidential conversations over the weeks and months leading up to Tuesdya’s confirmation by Crown of resports of the deal.

The fact that Crown implied there had been a proposal at a lower price than the $14.75 a share cash and scrip offer it outlined on Tuesday supports that conclusion.

Presumably, Wynn had hoped to lock down the final price and terms of an agreed deal – it had to be agreed because Wynn wanted to execute it via a scheme of arrangement- before it was announced to the market, its shareholders and its regulators.

Instead, the leak – which interacted with the ASX’s continuous disclosure regime to force Crown to disclose the fact of the proposal and the outline of its terms – meant it had an incomplete deal, with no certainly as to final price or terms, or indeed, success.

The Las Vegas casino giant confirmed it was in preliminary discussions but that no agreement had been reached and “there is no assurance that these discussions will result in a transaction.”

Just before the opening bell on Tuesday, the company went a step further and full out entirely.

Share prices fall

Before news of the deal leaked, Wynn had seen its stock rise more than 46 per cent this year.

Wynn’s shares fell nearly 5 per cent after the termination.

Crown Resorts shares closed nearly 20 per cent higher at $14.05, below the proposed buyout price of $14.75 as investors were skeptical of a deal.

Crown had said talks were at a preliminary stage, and that the companies had not agreed on a value or deal structure, and the proposal had not gone to the board.

Analysts predicted the deal would receive some pushback from investors due to limited growth in the Australian gaming market.

JPMorgan analyst Joseph Greff said he had reservations about the possible deal, financial news site Barrons reported.

“Given US equity investors’ general lack of familiarity with the Australian gaming market, ourselves included, we think this likely causes some pause in the recent share price momentum, given this, as well as a potentially lengthy probity review [and we known from past US gaming transactions, stocks can be stuck in deal purgatory between announcement and close],” he wrote in a note to clients.

Mr Packer stepped down from Crown’s board last year due to mental illness.

Sources close to Mr Packer told the Sydney Morning Herald and The Age on Tuesday that he had been “disengaged from the business for some time”, and had personally put Crown Resorts in play by making it known to northern hemisphere gambling giants that he was prepared to sell his stake.

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