Australia’s largest casino operator, Crown Resorts, confirmed Tuesday that it is in talks to be bought by Las Vegas casino giant Wynn Resorts.
Crown, which owns casinos in Melbourne, Perth and London and will soon open another in Sydney, said in a statement that the offer had an implied value of $10.50 ($14.75 AUD) per share, to be paid 50% in cash and 50% in Wynn shares.
The offer values Crown at around $7.83 billion ($10 billion AUD).
Stressing there was “no certainty that these discussions will result in a transaction,” Crown said the proposal was subject to conditions including regulatory approvals.
“The proposal is subject to a number of conditions including due diligence, Wynn obtaining all the necessary regulatory approvals and a recommendation by the Crown board. It is stated to be preliminary, confidential, non-binding and indicative,” the statement said.
Crown’s value has fallen 20% since mid-2018, amid lower-than-expected profits. Company executives have attributed the decline to a decrease in spending from wealthy Asian gamblers as the economic growth rate slows in China and Beijing is involved in a trade dispute with the U.S.
Wynn Resorts runs several casinos in the United States and Macau. Its founder, Steve Wynn, resigned as chairman and chief executive in February 2018 after claims of sexual misconduct, and has sold his stake in the company.
Crown, too, has battled controversy in the past three years. In 2016, 19 of its staff members were arrested in China on charges of illegally promoting gambling. A court jailed 16 of the defendants, including three Australian citizens, for nine-to-10 months, with the remaining three released after around a month in detention.
Soon afterward, Crown announced a momentous retreat from international expansion plans centered on Las Vegas and Macau, which led to a $263.51 million ($370 million AUD) deal to sell Wynn vacant land in Las Vegas on which Crown had planned to build a casino.
And in March last year, Crown’s billionaire director James Packer resigned from the company’s board, citing mental health issues.
Packer still owns 46.8% of the company.
Union Gaming Group analyst John DeCree said in a research note Monday night the move was part of a “get bigger or get bought” mentality.
“While we could easily calculate an accretive scenario for this transaction on a standalone basis, we suspect this move is part of a larger strategy for Wynn that is purely defensive,” DeCree said. “The Wynn Las Vegas and Macau assets are highly sought after.”
