SYDNEY (Reuters) – Australian casino giant Crown Resorts said on Tuesday it had received an indicative A$10 billion ($7.1 billion) takeover offer from Las Vegas’s Wynn Resorts, sending Crown’s shares soaring as investors bet on an even higher bid.
A sale would mark an end to Crown 47-percent owner James Packer’s 12-year foray into casinos after he re-badged his father’s media empire as a gambling concern in 2007. Packer quit the Crown board last year due to mental illness.
For Wynn, the deal would give 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.
“Pricewise, you’d be looking for a little bit more than this,” said James McGlew, executive director of corporate stockbroking at Perth-based Argonaut Ltd, a Crown shareholder.
“This is what appears to be the opening salvo.”
A sale along the lines proposed by Wynn would be Australia’s biggest M&A deal so far this year.
Crown shares jumped 21 percent to A$14.19, their biggest intraday gain since the company re-listed with its current name. Even so, they were still below the indicative buyout price of A$14.75 due to uncertainty about whether a deal would eventuate.
“It’s a preliminary-style bid which doesn’t yet provide an adequate premium for control, and most would expect there to be both more debate about the strategic merit and pricing,” said Angus Gluskie, managing director of White Funds Management, which also holds Crown shares.
Crown said the talks with Wynn were at a preliminary stage and 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.