Wynn drops takeover talks for Australia's Crown Resorts

Geneva

WYNN Resorts Ltd has abruptly ended its talks to buy Australian billionaire James Packer's Crown Resorts Ltd for A$9.99 billion (S$9.64 billion) - just a few hours after the discussions were made public.

Wynn said in a statement Tuesday that it ended the talks "following the premature disclosure of preliminary discussions".

Crown had confirmed the talks overnight after the Australian Financial Review, an Australian business and finance newspaper, had reported on the potential deal on Monday.

Buying Crown could have given the Las Vegas casino empire an alternative for growth amid a slowdown in the gambling enclave of Macau.

But Wall Street had expressed skepticism about the potential deal. The prospect, while of some merit, was "perplexing", said analysts at Bernstein, a sell-side research and brokerage firm in New York.

Union Gaming Analytics described the move as seeming to be "purely defensive".

Wynn shares fell as much as 4.7 per cent in New York trading on Tuesday.

Crown had risen 20 per cent on Tuesday in Sydney, but the news of the abandoned talks broke only after the close of trading there.

Earlier in the day, Crown Resorts had said that it had received an indicative A$10 billion takeover offer from Wynn, sending its shares soaring as investors bet on an even higher bid.

A sale would have marked an end to Crown's 47-per-cent owner James Packer's 12-year foray into casinos, after he re-badged his father's media empire as a gambling concern in 2007. Mr Packer quit the Crown board last year due to mental illness.

For Wynn, the deal would have given the world's second-largest casino company a foothold in a market popular with Chinese tourists, although a recent downturn in Chinese consumer spending has constrained Crown's revenue and share price.

The sale along the lines proposed by Wynn would have been Australia's biggest merger and acquisition deal so far this year.

When the news first broke, Crown had described the talks with Wynn as being at a preliminary stage; no agreement on value or structure had been reached.

Wynn was proposing to buy the company half in cash, half in shares, and the current proposal had not gone to the Crown board.

A spokesman for Consolidated Press Holdings, Mr Packer's company which holds his Crown shares, had not been available for comment then.

The sale at the proposed price would have fetched about A$4.7 billion for Mr Packer, who in addition to Crown, quit 22 company directorships last year in a remarkable retreat for the scion of a family which had been a fixture of corporate Australia for most of the 20th century.

The deal would also have provided some relief for Crown shareholders, who have seen their investment go sideways since late-2016, when 18 of the company's staff were arrested in China for breaking laws banning casino marketing. Crown has since pulled back from its Asia expansion plans - where it had competed with Wynn in Macau - and instead relied on high-rolling Chinese tourists at home to grow profit.

The deal would have put Wynn in charge of one of Australia's most high-profile developments, a A$2.2 billion luxury casino precinct called Barangaroo on the Sydney waterfront, which Crown has pitched as its future growth engine.

Wynn has properties in the United States and Macau, but over the past year, has ramped up promotion of a resort in Japan, a market seen as the next potential goldmine to Macau and a former expansion target for Crown. BLOOMBERG, REUTERS