Wynn Resorts Limited (NASDAQ: WYNN) has just launched the Crown Resorts Ltd (ASX: CWN) share price into jackpot territory after news of a potential takeover.
Crown Resorts is one of Australia’s largest gaming and entertainment groups. It operates two integrated resorts in Melbourne and Perth. Crown also fully owns and operates Crown Aspinalls in London, one of the high-end licensed casinos in the West End entertainment district. It is currently developing Crown Sydney at Barangaroo.
Why The Crown Share Price Is Going Nuts
The Crown share price has risen nearly 20% today after another major casino entertainment operator, Wynn Resorts, launched a takeover bid for Crown.
Crown said that the proposal raised in confidential discussions with Wynn Resorts has an acquisition consideration of 50% cash and 50% Wynn shares, with an implied value of $14.75 per share, with the exchange ratio being fixed.
At the date of the proposal, the ‘volume weighted average price’ of Wynn shares implied an exchange ratio of 0.042 Wynn shares per Crown share. However, the terms of the consideration are yet to be agreed.
Despite today’s euphoric response, the offer is stated to only be preliminary, confidential, non-binding and indicative at this stage. No agreement has been reached about the structure, value or terms of a transaction. In other words, nothing is guaranteed.
Will Crown Shareholders Accept The Offer?
James Packer has probably made some sort of noise about being interested in this deal for negotiations to continue to proceed. Every business and shareholder has a price that it would be worth selling for.
At the current share price of $14 there is still a potential 5.3% upside to the potential offer, but I think nearly all of the good news has been priced in, so I wouldn’t be interested in buying shares today. Whilst Crown does have a promising future, there’s a chance the offer might not go ahead, particularly due to the possibility of the state or federal government blocking the deal.
Crown shareholders may have hit the jackpot, but the ASX shares revealed in the FREE report below could be the next best ones to own.
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