It's a deal that was over almost as soon as it began.
Now investors are left looking at shares of Crown that are still holding on to about half their merger-induced gains in trading on the Aussie exchange, where the stock is listed as CWN. Will Wynn revisit the deal, driving the shares higher again? Will another bidder emerge? Or will Crown's stock descend to its previous level? These are billion-dollar questions.
Crown Resorts shares dropped 9% in Sydney on Wednesday when Wynn walked away. But that still leaves Crown shareholders with plenty of money on the table, as the stock shot up nearly 21% on Tuesday when word of the potential buyout emerged.
Meantime, shares of Wynn Resorts fell 3.9% on Tuesday as traders factored in the expense of the deal. Without that overhang, they should immediately regain any lost ground.... unless Wynn is bluffing.
Did Crown leak the deal? Who can say. But after its shares bounced in Sydney, it asked for a trading halt, then issued a statement to the Australian Stock Exchange confirming that it was in "confidential discussions" with Wynn, which had approached it for a deal.
Of course, the talks are hardly confidential once you've broadcast them to all and sundry. Crown, which said it was only responding to media reports about the deal, even laid out that Wynn was offering an "implied value" of A$14.75 per share in a transaction where Crown shareholders would be paid 50% in cash and 50% in Wynn stock.
That would value Crown Resorts at A$10 billion (US$7 billion). Yet on Wednesday, Crown was back with another stock-exchange announcement out of its Melbourne headquarters that Wynn "has terminated all discussions with Crown concerning any transaction." Las Vegas-based Wynn blamed the "premature disclosure of preliminary discussions" for the collapse.
That seems pretty final. But you can see from the stock price movement that it's actually a "glass half full" situation. Crown is in play. There could be other buyers. And Wynn may come back to the table once this whole fervor has died down, which is why you have punters buying back into Crown shares even as they were falling.
Behind this are the shadows of two outsize billionaires: Steve Wynn and James Packer.
The Australian Financial Review notes that Wynn Resorts is contending with its own troubles surrounding founder Steve Wynn as it faces a regulatory probe that threatens its ownership of the new US$2.6 billion Encore Boston Harbor casino resort.
The resort is due to open in June, but the Massachusetts Gaming Commission hasn't yet granted the necessary license. Wynn Resorts said on Wednesday that its CEO, Matt Maddox, has been adjudged by the Nevada Gaming Control Board to be a "suitable as an officer of Wynn Resorts" since January 2010 and "remains in good standing" with the Nevada board.
Regulators have been investigating Maddox and other Wynn executives. One report from the Massachusetts commission said management knew about sexual misconduct allegations against Steve Wynn, who has been forced to exit the company and sell his shares, but did not follow company policy in handling them.
The Crown deal would expand Wynn out of Macau, which accounts for three-quarters of revenues, and the United States.
Adam Dawes, a wealth manager with Shaw and Partners in Sydney, says he thinks the latest move is a "tactical play" and that Wynn will revisit the acquisition "when the dust has settled.
"We do think this deal will eventually happen," Dawes said.
Crown said Wynn Resorts' approach was "preliminary" as well as "confidential, non-binding and indicative." Crown's board hadn't yet considered its merits.
James Packer, who inherited larger-than-life-but-still-large-in-life founder Kerry Packer's empire, owns 46% of Crown through privately held Consolidated Press Holdings Group. So if James Packer backed the deal, it would almost certainly go ahead. The switch into Wynn stock would leave Packer holding US$2 billion in Wynn shares.
Complicating matters is the fact that James Packer resigned directorships at 24 Australian companies last year, including quitting Crown Resorts board in March 2018 due to mental health issues. Aussie media has outlined struggles with anxiety and depression for a man who once dated Mariah Carey. His yo-yo weight and ex-wives have been fodder for the aggressive Aussie press.
Aussie investment bank Macquarie says Crown Resorts has a "fair value price" of A$12.20 per share. As far as other potential suitors go, Galaxy Entertainment in Hong Kong or the Malaysian gambling group Genting could benefit from buying Crown.
Crown already has casinos in Melbourne and Perth. It aims to open a flagship A$2.2 billion (US$1.6 billion) casino project on the Sydney harborside in 2021.
Australia, which has not had a recession in a quarter of a century, is as sure a bet as you'll find in the casino industry. Growth is slow but steady. Aussie casino spend per head is around US$1,000, compared with US$470 per visitor in the United States.
Australia is also increasingly integrated with the rest of the Asia Pacific region. That brings increasing numbers of Chinese visitors and gamblers as well as promising inroads into the emerging middle classes of Southeast Asia -- markets you can count on for future gambling wins.