MGM Resorts Jim Murren Explores Wynn Resorts Buyout

MGM Resorts Wynn Buyout

MGM Resorts bought Mirage Resorts for $4.4 billion from Steve Wynn in 2000, a purchase which included Bellagio.

MGM Resorts has explored “back-channel” approaches in a buyout of rival Las Vegas casino company Wynn Resorts, according to the New York Post and Axios. Wynn Resorts is a subject of buyout rumors after its founder and CEO stepped down two months ago, then sold his remaining shares of Wynn two weeks ago.

If MGM Resorts bought Wynn Resorts, it would be the second time in the past 20 years that MGM Resorts bought Steve Wynn properties after Wynn’s excesses caused financial instability. In 2000, MGM Resorts bought Mirage Resorts for $4.4 billion, a package of resorts which included Bellagio.

The New York Post said of the current state of crisis surrounding Wynn Resorts: “Steve Wynn resigned from the company he founded two months ago after allegations of sexual misconduct, and bidders are now circling the gaming company and what some consider its caretaker management team.”

50% Chance Matt Maddox Sales

An anonymous source close to a large gaming company told the NY Post there is a 50% chance that new Wynn Resorts CEO Matt Maddox would reach a deal within the new several months. The source said, “I think if the Wynn CEO gets his deal, he’ll sell.”

The Post talked to a series of other sources who said no official talks had taken place yet. Those sources said Jim Murren could change his mind about a buyout. One gaming banker countered, “Yeah, MGM is interested.”

A source close to Steve Wynn said, “I wouldn’t be surprised if MGM buys all of Wynn.”

In February, MGM Resorts CEO Jim Murren said it was unlikely his company would pursue an acquisition of Wynn Resorts. That was around the time of Steve Wynn’s resignation, but when the gaming mogul still was the largest shareholder in the company. It was assumed Steve Wynn might continue to control his company behind the scenes.

Steve Wynn Sells Stock

Since then, Wynn Resorts settled a longstanding forced buyout dispute with Kazau Okada by buying $2.4 billion of shares from Okada’s former gaming machine manufacturing company, Universal Entertainment. Then the company moved to free Elaine Wynn from her shareholder agreement, thus clearing the way for Steve Wynn to divest himself of his shares.

Steve Wynn sold 12.1 million shares over a two-day period. Then Chinese casino company Galaxy Entertainment bought 5.3 million shares of Wynn Resort. T Rowe Price and Capital Holdings, longtime major shareholders of Wynn Resorts, bought the remaining Steve Wynn stock.

Buyout Candidates for Wynn

With those moves, MGM Resorts faces a whole new situation. For one, Galaxy Entertainment, a competitor of both Wynn Resorts and MGM Resorts in Macau, is now a key shareholder of Wynn Resorts. Jim Murren might prefer to buy Wynn Resorts to keep a competitor from gaining an undue advantage.

A bid by MGM could prompt other companies to jump into the bidding. The New York Post noted that Caesars Entertainment might be interested. Since MGM, Caesars, and Galaxy are all invoked, it stands to reason that the world’s biggest casino company — Las Vegas Sands Corporation — might be interested in acquiring a longtime rival.

MGM Resorts Profile

In any bidding war, MGM Resorts would be a major competitor. MGM Resorts owns MGM Grand, Bellagio, Mandalay Bay, New York-New York, and Luxor. The company owns MGM National Harbor near Washington DC, while it plans to open MGM Springfield in Western Massachusetts in the coming months. In China, the company owns MGM Macau and MGM Cotai, which opened in February.

One complicating factor that MGM Resorts (or any bidder) has to consider is a 2022 gaming license deadline in Macau. In 2022, all gaming licenses in the former Portuguese colony are up for renewal, with billions of dollars of investments on the line. Macau officials have played games with the new integrated resorts’ gaming table allotments, sending the signal that nothing is sacred for investors. Those Macau officials received word from Xi Jinping they should diversify Macau’s economy.

No New Directors for Wynn Board

Many analysts point to the lack of new directors being added to the Wynn Board of Directors. While Matt Maddox has discussed “refreshing” the board, but has made no move to add new board members. That fuels speculation that Wynn Resorts is preparing for a buyout instead of a building a long term vision itself.

One source said, “That inference corroborates to me that there will be a sale.”

The gaming expert said that Wynn Resorts is working against time, because Steve Wynn was the face of the casino company and its visionary. The source said, “Any weakness that could evolve over time is less visible today than it was be a year from now.”