People pose for photographs in front of the Wynn Macau casino resort in Macau, China, on Tuesday, July 24, 2018.Paul Yeung | Bloomberg | Getty Images
The proposal was for 10 billion Australian dollars. Wynn Resorts hoped the acquisition would expand its geographic reach amid headwinds in Asia. It would have offered Wynn a hedge against Macau, the Chinese gambling hub where its licenses are up for renewal, as well as two revamped Australian casinos and a third still being built on the Sydney harbor front.
“Following the premature disclosure of preliminary discussions Wynn resorts has terminated all discussions with Crown Resorts concerning any transaction,” the company said in a statement.
Wynn said in an SEC filing Tuesday that there is “no assurance that these discussions will result in a transaction” and will not comment further on the subject. Before news of the deal leaked, Wynn had seen its stock rise more than 46% this year. After news of the deal termination, the stock fell more than 3%.
The deal would have been Australia’s biggest M&A transaction this year. The proposal had an implied value of A$14.75 a share, half in cash and half in Wynn shares, Crown told the Australian Stock Exchange.
Talks were at a beginning stage, with no agreements on value or deal structure, and the proposal had not reached the board yet.
Analysts expected the deal to get some investor pushback, citing current limited growth in the Australian gaming market and concerns that the deal might disrupt expected strong free cash flow.
Crown is controlled by billionaire James Packer, who stepped down from the company’s board last year due to mental illness. The deal would have ended his career as a casino mogul with an A$4.7 billion payout. Crown had refocused on its Australian assets following a China crackdown in 2016.
In the past, Wynn has attempted to diversify and expand geographically in order to protect growth prospects if its Macau licenses aren’t renewed. It has looked to increase promotion of a resort in Japan, a market that Crown also looked to as an expansion area.