Financial analysts have predicted a Wynn Resorts takeover, but the names bandied about are pure speculation.
Steve Wynn sold 4.1 million shares of Wynn Resorts, lowering his stake in the company from 12% to 7.8%. The sell-off means Steve Wynn holds fewer shares of the $18 billion company he founded than his ex-wife, Elaine Wynn, who holds 9.3%.
While cutting his stake in Wynn Resorts, Steve Wynn also settled a 6-year court battle with Elaine Wynn. The settlement means that Elaine Wynn can lower her stake in Wynn Resorts, too, but the decision to unwind her shareholder agreement increases the chances of a takeover of the company.
Wynn Resorts currently is under investigation by the Nevada Gaming Commission, Massachusetts Gaming Commission, and the Macau Gaming Inspection and Coordination Bureau. Under such circumstances, it is best if Steve Wynn is not the shareholder with the biggest stake in the company, which explains this week’s sell-off.
Steve Wynn Sold 4.1 Million Shares
Steve Wynn sold the shares for $180-a-share. After the sell, Wynn Resorts stock was down 2.9 percent to $178.92. Despite the bad news throughout much of 2018, Wynn shares are up 6.1% on the year.
Bloomberg News reported that Elaine Wynn might be ready to wield more influence in the aftermath of this week’s agreement. Bloomberg’s John Lauerman wrote, “Elaine Wynn said this week that she may seek talks with company management over strategy, business, management, capital structure and allocation, corporate governance board composition and other matters.”
Elaine Wynn No Largest Shareholder
If so, it is a startling reversal for the power dynamic between Steve and Elaine Wynn. When the two divorced back in 2011, Elaine Wynn remained on the board of directors of the Las Vegas casino company, but was unable to divest herself of her 9.3% stock.
In 2015, Elaine Wynn was kicked off the Wynn Resorts board of directors. That led to a lawsuit by Elaine Wynn, who sought a deal similar to Kazou Okada’s 2012 shareholders agreement. Elaine Wynn declared in a court filing she was a whistleblower on misdeeds at Wynn Resorts, while Steve Wynn’s lawyers denied any wrongdoing.
Agreement with Kazuo Okada
Over the past several years, the court battles with Elaine Wynn and Kazuo Okada seemed to go Steve Wynn’s way. He blocked their sell of shares, while retaining full control of the casino company. After Donald Trump’s ascension to US president, his friend Steve Wynn became the RNC’s Finance Chairman.
The many allegations lodged against Steve Wynn changed the situation. Just in the past week, Wynn Resorts came to an agreement with Elaine Wynn and Kazuo Okada both. Steve Wynn had to resign as chairman and CEO of the company and no longer sits on the board at all. At age 76, it would seem his career in the casino industry is over.
Who Could Buy Out Wynn Resorts?
Bloomberg News did not speculate on who might take over Wynn Resorts. As one of the big four Las Vegas Strip casino companies — along with Las Vegas Sands, Caesars Entertainment, and MGM Resorts — few competitors would have the financial wherewithal to buy out Wynn Resorts. Caesars Entertainment just came out of a long bankruptcy and likely would not want to take on huge new debt. Las Vegas Sands is the biggest casino company in the world.
Speculation is rampant among financial analysts and TV pundits. Motley Fool suggested that Caesars Entertainment buy out Wynn Resorts. Barron’s noted that MGM Resorts, Las Vegas Sands, and Melco International were unlikely buyers, because all three owned Macau resorts like Wynn does.
MGM Resorts or Las Vegas Sands?
Jim Cramer, on the other hand, suggested that Las Vegas Sands or MGM Resorts were the likeliest options. Cramer said on The Street, “I think Wynn might actually be acquired by another casino company now that Steve Wynn has stepped down from his operating role in the wake of those admittedly disturbing sexual misconduct allegations. I think it’s a natural takeover target for, say, Las Vegas Sands Corp. or even MGM. It doesn’t rally 10 bucks in one session idly for nothing.”
One dark horse might be Genting Group. The Malaysian multinational conglomerate owns oil platforms and banana plantations in Southeast Asia. Genting Group owns Resorts World Sentosa in Singapore, but it does not have properties in Macau. Genting is a year away from opening Resorts World Las Vegas, but it is already licensed in Nevada. Genting is licensed in New York state, as well, while it has shown a desire to get into the casino industries of New Jersey and Florida previously. Any company trying to break into the Macau gaming market might have special hoops to jump through, but Genting has several times been chosen as a Top 10 Asian corporation, so it is a respected entity in the region.
The fact is, nobody knows what will become of Wynn Resorts. Less than 3 months ago, Steve Wynn was at the peak of his power and influence. No one saw the current situation coming. It is a revolution in the Las Vegas casino industry and revolutions usually are unpredictable.
Update: Steve Wynn Sales All Shares of Wynn Resorts
In an update, Steve Wynn sold the remaining 8 million shares of Wynn Resorts on Friday, March 23, so he no longer has a financial connection to the company he founded. On Sunday, March 25, Galaxy Entertainment Group of Hong Kong and Macau bougth 5.3 million shares of Wynn stock. T Rowe Price and Capital Holdings, two longtime major shareholders of Wynn Resorts, bought 8 million shares of Wynn stock at the same time.
