Brokerage firm Sanford C Bernstein said on Monday that predictions of a potential buyout of Wynn Resorts in the wake of the Steve Wynn scandal is unlikely to take place any time soon due to any such acquisition being “fraught with complexities,” particularly in regard to its Macau operations.
The possibility of a rival operator swooping in and taking control of the embattled company has been widely speculated since Wynn stepped down as Chairman and CEO amid allegations of sexual misconduct, with the whispers growing even louder after the company settled a number of long-term lawsuits in rapid succession.
They included Wynn Resorts withdrawing a claim of breach of fiduciary responsibility against co-founder Kazuo Okada and a US$2.4 million settlement agreement with Japan’s Universal Entertainment Corp and Aruze USA over the forced redemption of over 24 million shares in 2012.
There has also been some speculation that Steve Wynn could sell his 12% stake in Wynn Resorts after a Nevada court last week ruled a three-way stockholder agreement between he, ex-wife Elaine and Okada was “invalid and unenforceable.”
Despite the growing interest, Bernstein said a buyout would “probably not” happen “any time soon.”
“While the Wynn assets are attractive and may be coveted by numerous parties, we see any acquisition as fraught with complexities, in particular with respect to acquisition of the Macau operation,” it added.
Target price down
On the other hand, Bernstein revised down Wynn Macau’s target price to HK$30 as they “see limited potential for further multiple expansion and upward estimate revisions in the near term.”
“We are concerned about GGR growth decelerating (especially in VIP) in the second half of 2018,” Bernstein said. “Unless we see stronger than expected market growth (or Wynn takes more share than we expect), the positives for the company are largely priced in and outperformance will be difficult.”
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