Shares of Australian gaming company Crown Resorts fell 10% in early trading on news that Wynn Resorts was no longer in discussions for a possible buyout.
Crown, in a filing with the Australian Securities Exchange on Tuesday, disclosed that Wynn proposed a $7 billion takeover of the company, after news of the discussions had been broken by the Australian Financial Review.
“Following the premature disclosure of preliminary discussions, Wynn resorts has terminated all discussions with Crown Resorts concerning any transaction,” Wynn said in an announcement.
The takeover news had sent Crown shares up 20%.
“Wynn’s actions are more likely to reflect a genuine frustration with a breach of the confidential nature of the discussions than an attempt to add pressure to the negotiation,” said Angus Gluskie, a managing director at White Funds Management. White Funds holds a stake in Crown.
Analysts said the deal would have given Wynn insurance against its casinos in Macau, China, where its licenses are up for renewal. Meanwhile Crown contends with fallout over an economic slowdown in China.
The Gaming Inspection and Coordination Bureau of Macau is reportedly increasing audits of the junket business in the Asian gaming destination.
“I reckon they will be back, but will play cold hand for a while,” said James McGlew, executive director of corporate stockbroking at Argonaut in Perth. Argonaut is also a Crown shareholder.
The news comes after Elaine Wynn and Wynn executives testified before a Massachusetts Gaming Commission committee seeking to determine whether or not the company was still fit to hold its gaming license.
Regulators found former executives at the company covered up allegations by employees of sexual misconduct by Steve Wynn.
Elaine Wynn is the ex-wife of Steve Wynn and the largest shareholder in Wynn Resorts. Steve Wynn resigned from the company and sold off his stake after the sexual misconduct allegations were made public.