Crown share price: falls 10% after Wynn cancels $7.1 billion takeover talks

11 April, 2019, 09:52 | Author: Donna Miller
  • Pro Wynn Crown Resorts Will Resume Acquisition Talks

The AU$10 billion ($7.1 billion) offer, which if brought to closure would be one the most massive acquisition deals in the Australian gambling industry, was scrapped suddenly after media leaks.

Wynn operates a casino in Las Vegas, two in Macau (where Crown had a stake in a casino before selling out) and is building another in Boston.

"The Crown board has not yet considered the most recent proposal from Wynn".

After the Australian Financial Review revealed Wynn's takeover approach, Crown not only confirmed the confidential talks on Tuesday, but also disclosed the price that Wynn was offering.

Details of deal were released just weeks after Packer was named the nation's 15th richest person in The Australian's The List, with a net worth of $4.23 billion.

Wynn then issued two statements, first confirming the talks, and, a few hours later, stating that they had ended. "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".

Crown said in a statement that discussions are at a preliminary stage and no agreement has been reached between the parties in relation to the structure, value or terms of a transaction.

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

In March a year ago, Mr Packer resigned from Crown's board, citing mental health issues.

Packer still owns 46.8% of the company.

The Wall Street Journal spoke to a source who said Wynn executives were shocked by the Crown announcement. It is fighting fierce competition for an operating license in Japan. Now that the Australian gaming and entertainment company is on the market, other gambling groups may now be interested in an acquisition, which is expected to increase its value.

DeCree also suggested that Wynn's move could be a means of staving off any potential of being acquired itself after Macau's Galaxy Entertainment Group purchased a 4.9% stake in the company in the wake of the Steve Wynn scandal previous year.

Maddox, who took over as CEO last February but had been a close confidante of Steve Wynn for years, had only "minimal" and "partial" knowledge of the spying, the company maintained.

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.

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