Wynn ends A$10 billion deal talks with Australia's Crown Resorts
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)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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