Crown shares plunge after Wynn takeover offer collapses

Wynn Resorts said it was pulling the plug on a potential takeover of Australian gambling giant Crown Resorts

"The proposal now contemplates acquisition consideration (50-percent cash and 50-percent Wynn shares) with an implied value of AUD14.75 [US$10.5] 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".

But it plunged to A$12.55 in early Sydney trading Wednesday, from A$14.05 at the close on Tuesday, after Wynn said overnight it had "terminated all discussions with Crown" due to their "premature disclosure".

That offer would have valued Crown at around $10bn.

Crown has endured a turbulent three-year period in which it retreated from its expansion plans in Las Vegas and Macau, while 19 of its staff were arrested and jailed in 2017 for promoting gambling in China.

Wynn's backtracking illustrates how media leaks of deal talks can test the resolve of potential acquirers.

The shares surged by as much as 22 per cent to $14.33 and were still more than 20 per cent higher at 11.15am Sydney time.

This can make deal negotiations more difficult by emboldening acquisition targets to drive a hard bargain, analysts said.

The talks had been going on for some months and involved a previous offer, The Australian newspaper reported.

Crown Casino in Melbourne
Camera Icon Crown Casino

It added: "The proposal contemplates an acquisition of Crown by Wynn via scheme of arrangement for a combination of cash and Wynn shares".

A few hours after that filing, the US firm announced it was ending talks with Crown Resorts.

At A$12.86, the stock remained nearly 10 percent higher than its last price before Wynn's approach was disclosed, suggesting hope for a deal had not completely evaporated. It has attributed the slump to slowing economic growth in China, where big gamblers who travelled to Australia are now less likely to be in the mood to gamble.

Wynn Resorts runs several casinos in the United States and Macau.

In the past couple of years, however, Crown Perth has felt the effects of weak consumer confidence and a fall in the numbers of Asian high-rollers gambling at its tables.

Soon afterward, Crown signaled a retreat from worldwide expansion plans that included Las Vegas and Macau.

A spokesman for Consolidated Press Holdings, Packer's company which holds his Crown shares, was also not immediately available for comment.

Last year, Australian tycoon and former Crown head James Packer, son of the late publishing and gaming mogul Kerry Packer, abruptly departed the family firm, citing "mental health issues", though he remains a significant shareholder. That led to a $370 million deal to sell Wynn vacant land in Las Vegas on which Crown had planned to build a casino.

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