Crown shares drop 10% after AFR leak on Wynn/Packer talks scuttle negotiations

Wynn Resorts says it has scrapped preliminary talks to acquire the James Packer-controlled Crown Resorts for $10 billion ($US7 billion) after the Australian Financial Review broke news of the negotiations.

Crown shares jumped as much as 22 per cent on the news yesterday to $14.37, close to the $14.75 per share level that Crown said Wynn’s latest cash-and-stock offer valued the company.

When the markets opened they shot down 10.6% to $12.55.

After the AFR revealed Wynn’s takeover approach, Crown not only confirmed the confidential talks on Tuesday, but also disclosed the price that Wynn was offering.

It added that Crown’s board had not yet considered Wynn’s latest offer.

Wynn, the world’s No.2 casino operator, then issued two statements, first confirming the talks, and, a few hours later, stating that they had ended.

“Following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction,” the company said in its second statement.

Wynn was founded in 2002 by Steve Wynn, who started his casino business in Las Vegas in the 1960s.

Beset by sexual misconduct allegations, Wynn left the company and sold his entire 11.8 per cent stake in Wynn Resorts for $US2.1 billion last month.

Wynn operates large resort-and-casino complexes in Las Vegas and Chinese gambling hub Macau, with another under construction in Massachusetts.

The Australian reported the departure of Wynn Resorts billionaire founder Steve Wynn last year enabled the US-based casino operator to come forward with its $10 billion takeover approach for Crown Resorts.

It wrote the offer landed with the company about one month ago, after which Crown called in Goldman Sachs and UBS as its defence advisers.

Ashurst is working as a legal adviser to Crown, which counts James Packer as a 47 per cent shareholder.

Then there was the period when both tycoons were competing for the casino licence in Sydney decades ago, and even Donald Trump.

Wynn was unsuccessful in securing the Sydney casino, which was won by Harrah.

Moelis is understood to be working on the transaction with Wynn because of the connections of founder Ken Moelis with casino operators in the US. 

Deutsche Bank is also involved.