Steve Wynn cut his stake in the USD18 billion casino company he founded after settling an acrimonious, six-year court fight with his ex-wife, a move that may move the company closer to becoming an acquisition target.
Wynn, 76, sold 4.1 million shares in Wynn Resorts Ltd. at $180 a share, according to a regulatory filing yesterday. The sale brings his stake down to 7.8 percent from 12 percent, lower than his ex-wife’s holding in the company.
The sale, along with the unwinding of a shareholder agreement that prevented Elaine Wynn from lowering her 9.3 percent stake, increases the possibility of a takeover of Las Vegas-based Wynn Resorts. The couple’s court battle also raised concerns about the company’s handling of harassment claims against Wynn that casino regulators are still investigating and could lead to him being found unfit to be the largest shareholder in a casino company.
Wynn Resorts fell 2.9 percent to $178.92 yesterday in New York, and has gained 6.1 percent since the beginning of the year.
Though the buyer of the 4.1 million shares remains unknown, Bloomberg analysts speculate that Malaysia’s Genting Bhd., which has long coveted a Macau license, might be interested.
Analyst Tara Lachapelle argued this week that Wynn’s willingness to part with his 12 percent stake and the company’s current valuation discount makes it an attractive takeover target.
But to others, like Ben Lee, managing partner of IGamiX Management & Consulting, the two companies are not compatible.
“Genting’s DNA [culture] is very different; very much mass market. Where they have ventured out of this [mass market] area, it has not gone well,” said Lee, citing the examples of previous investment into Norwegian Cruise Lines Holdings and London casino Maxims. “[Genting] only know one way of corporate acquisition [… and] the results have been less-than-stellar.”
In contrast, Wynn Resorts is known for its focus on the VIP market.
A subsequent Bloomberg report noted that “the businesses remain quite different. Genting targets a family audience in contrast to the gilded crowd favored by Wynn. Even in Singapore, where it takes as much of half its winnings from the same mostly Chinese, high-rolling VIP gamblers who throng Macau, licensing rules mean the junket operators who financially underpin the business in both cities are different.”
Lee said that the reports on a potential Genting purchase were very speculative.
This is because there are several inherent risks with the company, including its failure to adequately invest in non-gaming amenities in Macau, the upcoming license expiry in 2022, and the fact it is still being investigated by several gaming boards for sexual misconduct allegations.
Certainly, Lee said, no Macau investor is going to want to double down on its risk ahead of the concession expiration dates between 2020 and 2022.
Wynn’s decision to sell his stock comes after a quick fall from grace triggered by a series of sexual misconduct accusations that first surfaced in January.
He had sought to control as much stock as possible in the company bearing his name to avoid a repeat of the takeover he faced in 2000, when under pressure from investors, he sold Mirage Resorts, under which he built the Bellagio and other opulent casino-resorts that helped put Las Vegas back on the map.
Wynn’s termination agreement restricts him to selling no more than one-third of his shares in a given quarter. Some analysts believe liquidation won’t happen immediately and that Wynn Resorts has the resources to redeem his and his ex-wife’s shares. DB/Agencies
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