Operator News
China – Galaxy buys 5.3m shares as Steve Wynn cashes out
By Phil - 23 March 2018
Macau casino operator Galaxy Entertainment has bought 5.3m shares in Wynn Resorts for US$927.5m giving it a five per cent share in the company.
Analysts believe that the deal strengthens Wynn’s position in Macau whilst bolstering the potential for a joint bid for a lucrative casino licence in Japan.
The investment comes as the company’s former CEO Steve Wynn separately sold his remaining shares in Wynn Resorts. Mr. Wynn had initially sold 4.1m of his 12.1m shares on the open market for US$738m but has now reached an agreement to sell the remaining 8m shares to two of Wynn Resorts’ long-term institutional investors.
Galaxy Entertainment Group Vice Chairman Francis Lui, said: “This is a unique opportunity to acquire an investment in a globally recognised entertainment corporation with exceptionally high quality assets and a significant development pipeline.”
“It is an honour to have such a distinguished company as Galaxy Entertainment as a shareholder which shares many of the same core operating philosophies and values,” said Wynn Resorts CEO Matt Maddox.
In addition, two long-term institutional investors, both of whom are currently investors in Wynn Resorts, have agreed to purchase the remaining eight million shares held by founder and former Wynn Resorts CEO Steve Wynn, thus demonstrating their confidence in the long-term strength of the company. The purchase price of the shares held by Mr. Wynn is also $175 a share. The two sales, combined with previous sales by Mr. Wynn, effectively eliminate his ownership in Wynn Resorts.
The announcement follows the settlement two weeks ago of long-standing litigation between Wynn Resorts and Universal Entertainment Corporation.
“The resolution of that litigation, combined with the new agreement with Galaxy Entertainment Group and the liquidation of Steve Wynn’s shares in the company positions Wynn Resorts for even greater stability, strategic focus and future growth,” Wynn Resorts stated.
Some analysts believe the investment from Galaxy could be the start of a much bigger deal further down the line.
Sanford C Bernstein & Co analyst Vitaly Umansky said: “Over the longer run, Galaxy may be a potential acquirer of Wynn Macau, and the initial purchase gives Galaxy a first bite at the company. A Galaxy acquisition of Wynn Macau assets would create the leading Macau gaming company. Wynn and Galaxy may be looking at collaborating on future development opportunities in Asia, with Japan being the critical development initiative.”
Others believe that protecting the Macau licences which are up for renewal soon were key to the tie-up with Galaxy.
David Bonnet, Partner at Delta State Holdings, said: “The risk of potentially not regaining the Macau gaming concession specifically due to allegations against Steve Wynn are too great not to be immediately dealt with. With Galaxy now as a major shareholder, it reduces the potential uncomfortable questions that any gaming regulators, specifically Macau regulators, will have in the upcoming license rebidding.”
Grant Goverstsen, Union Gaming Analyst, added: “There are other large gaming companies who do not have a presence in Macau, but who desperately want to be in Macau, and we would not be surprised to see them angling for a seat at the acquisition table too.”
