Does Wynn sale open Macau door for Genting?

Steve Wynn’s announcement he is selling some, or all, of the 12 percent stake in the company he founded may open the door for Malaysia’s Genting to enter the Macau market, Bloomberg argues in an analysis.

Genting Singapore has S$2.6 billion in net cash and free cash flow of $1.15 billion in 2017, a figure exceeded only by Wynn Resorts and Sands China, the report said.

If Genting Singapore were to offer Wynn Resorts a 20 percent premium to its closing price Tuesday, paid for one-third with cash and two-thirds with its own stock, it would be giving target shareholders 8.5 percent more than the stock’s highest price to date, it adds.

If it could squeeze out just $110 million of annual synergies (equivalent to about 13 percent of last year’s combined selling, general and administrative costs for the two companies) the deal would be accretive in the first year, according to Bloomberg’s merger calculator.

The report argues that a merger between existing operators in Macau would likely be frowned on by regulators, while Genting has been seeking to get into the market for many years having missed out on a license.

 

This week Steve Wynn announced he began selling down his stake, offloading shares in the company he founded. In a Securities and Exchange Commission filing, he said he sold more than 4 million shares at $180 each. He now has around 8 million shares, and his stake in the company has fallen from 12.1 percent to 7.8 percent.