The deal is for $10 billion in Australian dollars, which translates to $14.75 per share.
On Monday, Wynn Resorts made a AUS$10 billion takeover bid for Crown Resorts, the largest land-based casino company in Australia. According to a Crown filing with the Australian Stock Exchange (ASX), the Wynn-Crown Resorts buyout proposal has an implied value of AUS$14.75, with half of the bid in cash and the other half in Wynn Resorts share.
James Packer, the son of legendary media magnate Kerry Packer, would sell his 47% share in the company for an estimated AUS$4.7 billion. The sell would be the end of a tumultuous career as a casino mogul for James Packer. He last year left Crown Resorts for mental health reasons, but many expected him to return eventually.
For Wynn Resorts, the buyout attempt is a chance to hedge against its Macau investments. In 2022, Macau officials review the licensing status for all three US casino companies operating in the city. While nothing suggests officials will cancel the licenses on multi-billion dollar casino-resorts, nothing says they won’t. Buying the top casino operator in Australia diversifies the Wynn portfolio. Melbourne, Sydney, and Perth aren’t as lucrative as Macau, but Aussies pays in more per capita to the pokies more than any nationality.
The buyout offer appears at first glance to a boon for shareholders. The proposal offers a 26% premium on Crown’s share price at last Friday’s closing of the ASX.
Reactions to Wynn-Crown Resorts Buyout
Angus Gluskie of major Crown shareholder, White Funds Management, said the bid is a preliminary offer. Gluskie said, “It’s a preliminary-style bid which doesn’t yet provide an adequate premium for control.”
The gaming analyst said, “Most would expect there to be both more debate about the strategic merit and pricing.”
Consolidated Press Holdings, James Packer’s holding company that owns Crown shares, did not make a public comment on the offer yet.
Crown Resorts History
Crown Resorts currently faces a series of troubles. Kerry Packer founded the company decades ago, but James Packer inherited Crown when his father died in 2005. By 2007, James Packer focused almost exclusively on the casino business. He invested in the Fontaineblue project in Las Vegas, but it went bankrupt when the Global Recession of 2008-2009 hit.
From 2007 to 2010, James Packer’s fortune shrank from $7 billion to $3 billion. Macau was the key to his second reversal of fortune. In 2004, Kerry Packer partnered with Lawrence Ho to create Melco Crown. Melco built casino-resorts like City of Dreams and Studio City. As 33% owner in those resorts, Crown became an international casino powerhouse.
Back home, Crown became the undisputed premier casino company in Australia. For many years, Crown Melbourne and Crown Perth were key revenue sources. In 2013, Crown won the right to build Crown Sydney, a casino in Sydney Harbor. Crown Sydney ended the casino monopoly of Echo Entertainment (now Star Entertainment) — its chief Australian rival — in New South Wales.
James Packer’s Private Life
Yet James Packer faced his own issues. Packer brawled with Nine Entertainment CEO David Gyngell in a made-for-tabloid incident in 2014. He had an incident with his own security staff in 2016. He proposed marriage to American pop diva Mariah Carey, then left his position at Crown Resort when she agreed to the marriage. (The two eventually called off the marriage.)
When 18 Crown Resorts employees were detained by Chinese police in Shanghai for violations of China’s gambling ad laws, James Packer returned to the Crown board. He negotiated the eventual release of the workers, paid a $1.5 million fine, and agreed to leave the Chinese market. The company sold its Melco Crown shares, and Lawrence Ho turned the company into Melco Resorts and Entertainment. For his part, Packer said Crown would focus on Australia again.
All seemed well, until James Packer left the company in spring of 2018 due to “mental health issues“. He flew to Boston to check himself in a mental hospital, then checked himself out again to live in his mansion in Argentina. Later, he moved to Cabo San Lucas, then moved to Los Angeles to be closer to his children. To this day, James Packer remains Crown’s top shareholder, but absent from the company.
About Wynn Resorts
Wynn Resorts is no stranger to controversy, either. Its own chief executive, Steve Wynn, stepped down in February 2018 after a Wall Street Journal article alleged a pattern of sexual harassment and sexual misconduct.
At the time, the 77-year old Steve Wynn was the Republican National Committee’s Finance Chairman. Wynn, a lifelong registered Democrat but a friend of Donald Trump, was at the height of his power and prestige. In the #MeToo era, the Wall Street Journal expose caused Wynn’s downfall within weeks.
By March 2018, he divested himself of Wynn Resorts stock. Matthew Maddox is the new CEO. As the Wynn board noted to Massachusetts regulators in an April 2 licensing hearing, all but one of Wynn’s board members have changed in the past year.
About Steve Wynn
Steve Wynn became a Las Vegas casino executive in 1968 when he bought a controlling interest in the Golden Nugget Las Vegas from Howard Hughes. Throughout the 1970s, Steve Wynn continued to build the Golden Nugget brand. In the 1980s, he opened the Golden Nugget Atlantic City — late named Bally’s Grand, AC Hilton, and the Atlantic Club. Wynn sold the casino in 1986 after a dispute with New Jersey regulators.
In the 1990s, Steve Wynn transformed the Las Vegas Strip into its modern incarnation: a family-friendly enclave of mega-resorts. He opened the Mirage, Treasure Island, and Bellagio in Las Vegas. He opened Beau Rivage on the Gulf Coast of Mississippi. His debts on the grand development program forced him to sell Mirage Entertainment to MGM Resorts in 2000.
Therefore, Steve Wynn founded Wynn Resorts in 2000 alongside his former wife, Elaine Wynn. The casino mogul built Wynn Las Vegas, a luxury resort that would be his brand for the next 13 years. In Macau, he opened the Wynn Macao and the Wynn Palace. He built Encore Las Vegas as a second phase of Wynn Las Vegas, then won the license for the Encore Boston Harbor, which is set to open in June.