Crown’s secret attempt to start a bidding war


And that 22 per cent ballooning of Crown’s share price on Tuesday deflated by more than 8 per cent on Wednesday morning.

As I reported on Tuesday, it is understood that Crown had approached others in the gaming market over the past couple of months, including another large casino group, Sheldon Adelson’s Las Vegas Sands Corp.

The fact that the share price didn’t fall back to pre-announcement levels suggests the market understands that Crown is in play.

This raises a question mark over who approached who in the discussions between Wynn and Crown. Crown’s statement said the discussions had been initiated by Wynn. Yet this assertion was not echoed in Wynn’s statement to the US market on Tuesday evening.

Investors have questioned whether the detailed statement made by Crown on Tuesday which confirmed the negotiations, revealed the indicative price and the structure of the offer, was a means to getting an auction started.

It certainly looks that way.

(It is noteworthy that the statement from Crown confirming the talks was unusually fulsome. Crown is the master of the one-line press release.)

Although Crown’s board had not even considered the proposal, company insiders seemed enthusiastic about what they thought to be a generous price.  And Crown wasn’t trying to hose down the news.

Potential suitors

If you are shopping around a company, the more potential suitors are aware of interest from other parties the better.

It now remains to be seen who might emerge from the woodwork, and whether Crown can drum up a bidding war.

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The only Australian industry player large enough to consider such a deal is The Star – and while it could best capitalise on any merger synergies, it would not pay a price which gifted all the synergy benefits to Crown shareholders.

Top of the list of other potential suitors for Crown would be Genting. The Malaysian gambling conglomerate held a 9.7 per cent stake in The Star six years ago, but sold the last of it in 2017.

This demonstrated that for a time, at least, Genting had an interest in the Australian casino market. It would also understand the gaming landscape here better than other international players.

The $46 billion Galaxy Entertainment Group would be another potential player. While its major assets are in Macau, it has a stated desire to explore international development opportunities.

And then there’s MGM Resorts International, which Crown would have put on its list of potential buyers while the company has been expanding its casino property footprint in the US.

Will Wynn come back?

Of course, there is every chance that Wynn may regain an interest in Crown in the medium term.

The fact that the share price didn’t fall back to pre-announcement levels suggests the market understands that Crown is in play.

What the events of this week seem to have made clear is that James Packer wants out of the Casino empire over which he no longer has a governance position.

He has battled with his physical and mental health for years and clearly has no appetite for the publicly listed corporate world.

He has become a self professed recluse – living primarily in Aspen/Colorado, but spending time in his other homes in Los Angeles and Argentina.

Future prospects

But one shouldn’t discount Packer’s incredibly fine radar for reading future prospects for businesses and industries.

If Packer is selling, it will have as much to do with a recognition that his company has limited growth prospects and that its future financial performance relies heavily on the whims of the Chinese Government and its attitude towards its people spending money in offshore casinos.

The analyst community were in broad agreement that the now-abandoned Wynn offer of $14.75 was well priced for Crown shareholders, and not especially logical for Wynn.

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