April 10, 2019 / 12:14 AM / 4 months ago

Crown shares tumble after Wynn cancels $7.1 billion casino takeover

SYDNEY (Reuters) - Shares in Australia’s Crown Resorts Ltd tumbled on Wednesday after U.S. casino giant Wynn Resorts Ltd quit discussions for a A$10 billion ($7.1 billion) buyout, although some investors appeared to be hoping for a change of heart.

FILE PHOTO: An exterior view Wynn hotel-casino in Las Vegas, Nevada, U.S., February 7, 2018. REUTERS/Steve Marcus

Wynn, the world’s second-largest casino operator, walked away from the deal after details of the offer, which had sent Crown shares soaring more than 20 percent, became public through a leak to an Australian newspaper.

The indicative offer for Australia’s biggest casino operator had been viewed by investors as opportunistic but also only the beginning of a drawn-out pursuit. That is a lot less likely now.

“Wynn’s actions are more likely to reflect a genuine frustration with a breach of the confidential nature of the discussions than an attempt to add pressure to the negotiation,” said Angus Gluskie, managing director of White Funds Management, which holds Crown shares.

Crown stock dropped 10 percent at the open, then pared some losses to trade 8.5 percent under Tuesday’s closing price, while the broader market fell 0.1 percent.

At A$12.86, the stock remained almost 10 percent higher than its last price before Wynn’s approach was disclosed, suggesting hope for a deal had not completely evaporated.

“I reckon they will be back, but will play cold hand for a while,” said James McGlew, executive director of corporate stockbroking at Perth’s Argonaut Ltd and another Crown shareholder.

News of Wynn’s interest was first broken by Australian Financial Review on Tuesday and confirmed by Crown, which also disclosed Wynn’s offer price.

Wynn then issued two statements, first confirming the talks, and, a few hours later, stating that they had ended. Crown said in a statement it noted Wynn’s decision. Wynn shares fell almost 4 percent in New York on Tuesday.

The deal was to offer Wynn a hedge against Macau, the Chinese gambling hub where its license are up for renewal, by giving it two lavishly revamped Australian casinos and a third still being built on the prized Sydney harbor front.

The offer came as Crown is grappling with the effects of an economic slowdown in China, which has crimped revenue from high-rolling Chinese gamblers at its Australian tables.

Reporting by Tom Westbrook and Paulina Duran; Editing by Michael Perry and Stephen Coates

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