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Wynn backs out of Crown deal
Posted on Wednesday, 10 April 2019 12:59
Wynn Resorts has pulled out of talks to acquire Crown Resorts just one day after details of the possible transaction were disclosed by the Australian gaming and entertainment group.

In a written statement, the Las Vegas-based company said in a statement it had ended negotiations due to the premature disclosure of preliminary discussions.

The proposed purchase price of AUD 10.00 billion (USD 7.11 billion), would have represented the largest announced deal in Australia so far this year, according to Zephyr, the M&A database published by Bureau van Dijk.

Crown’s statement confirmed media reports that Wynn was offering cash and stock at an implied value of AUD 14.75 per share, including 0.04 Wynn shares for every one held.

At the time, the target said that there was no guarantee of a transaction taking place, and a possible deal had not yet been considered by its board.

Following the initial statement yesterday, shares in Crown closed up 20.0 per cent to AUD 11.72 on 8th April, the last trading day prior to the statement, giving the company a market capitalisation of AUD 7.94 billion.

After Wynn pulled out of the negotiations, the target’s stock dropped down to AUD 12.79 at 16:00 today.

However, Reuters reported there is optimism that a deal could still take place, as the share price remains higher than before Wynn first proposed the acquisition.

The purchase, the news provider noted, would have given Wynn an increased presence into Asia, as well as access to two new casinos in Australia, adding to Wynn’s existing portfolio, including luxury resort and hotel brands Wynn Las Vegas and Wynn Macau.

Headquartered in Southbank, Crown is billed as one of Australia’s largest gaming and entertainment groups.

It owns two of the country’s leading resorts; Crown Melbourne Entertainment Complex and Crown Perth Entertainment Complex: the latter operates three hotels, a 2,300-seat theatre, as well as restaurants and bars.

For the financial year ended 30th June 2018, the business booked revenue of AUD 3.49 billion, up from AUD 3.23 billion in the preceding 12 months.

David Bain, an analyst at Roth Capital Partners, told news.com.au that Wynn’s limited experience in managing acquisitions could be a reason for exiting the deal, as it does not have a proven track record of targeting large companies.

The terminated discussions come during a turbulent time for the former buyer, following billionaire founder Steve Wynn stepping down as chief executive following allegations of sexual misconduct in 2018.

© Zephus Ltd