Wynn’s talks with Crown Resorts signal a strategic shift, analysts say


Wynn Resorts‘ recent $7.1 billion takeover offer for Australia’s Crown Resorts signals a changing approach at the world’s second-largest casino operator, analysts told CNBC.

premature disclosure of preliminary discussions.”

“I don’t think these types of conversations would have been had when Steve Wynn was at the helm of the company,” Mansfield said.

Wynn, the founder of Wynn Resorts, resigned as CEO and chairman in February 2018 following a bombshell report by the Wall Street Journal that detailed allegations of decades of sexual misconduct by the gaming tycoon. By the end of March, he’d sold his entire stake in the company he’d founded. He continues to deny all allegations of sexual misconduct.

Adam Dawes, senior investment advisor at financial services company Shaw and Partners, agreed that the move could be attributed to a change in management.

“Anytime you get … a long-term CEO moving aside, yes you’re going to have that kind of change in a new business direction or a development in the business,” Dawes told CNBC’s “Street Signs” on Wednesday.

Despite the setback in negotiations, Dawes said a deal will likely be back on the table in the future.

“We think this is a little bit of a tactical play on Wynn’s behalf,” Dawes said.

“What they’ve done is they’ve allowed this deal to fall over, but we do think that this deal will eventually happen,” he said, citing the stock performance of Crown.

Crown’s stock closed at A$12.77 per share (approx. $9.13), down from Tuesday’s gains, but still more than 8 percent higher than its closing price on Monday before the offer was leaked.

Fitch Ratings’ Mansfield said the deal was likely to benefit Wynn if it went through.

“When we first heard the news of the transaction, our first initial response was that the addition of the assets of Crown to Wynn’s overall portfolio would be a positive thing for Wynn from … both an operational and a strategic perspective.”

Firstly, he said, the acquisition of Crown — which has “about a 46 percent market share in Australia” — would give Wynn a “strong foothold right off the bat” in a market to which the casino behemoth doesn’t currently have access.

Furthermore, he added, Crown’s current assets are “really high quality” and would likely “fit quite well” into Wynn’s broader portfolio.

“From a larger perspective, you know, greater global diversification is a good thing and it also kind of enhances Wynn’s already good exposure to the Chinese VIP market,” Mansfield said.

— CNBC’s Contessa Brewer contributed to this report.

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