U.S.-based casino operator Wynn Resorts, Limited (NASDAQ: WYNN) called off merger talks with Australia's CROWN RESORTS L/ADR (OTC: CWLDY), but one expert says talks will resume with a finalized agreement.
Wynn's decision to walk away from merger talks is a "tactical play," Adam Dawes of Shaw and Partners told CNBC Wednesday.
Investors are likely assuming talks will resume, as Crown Resorts' stock rebounded from its Tuesday lows and remains above where it was trading at prior to media reports of the talks,
"The market today is definitely looking at this as a bit of a ploy and [Wynn] will perhaps put the deal back on the table once the dust has settled," he said.
Wynn is likely looking at gaining new exposure to Australia as a defensive move, he said. Estimates from Morgan Stanley place the gambling spend per head at around $1,000 in Australia versus around $430 in the U.S.
Crown Resorts boasts "very good assets" in contrast to Wynn's profile as being a "builder of assets" instead of a buyer, Dawes said. Nevertheless, an acquisition of Crown Resorts represents a good fit for Wynn if the details are properly worked out, he said.
Fitch Ratings' Mansfield: Good Fit
A potential acquisition of Crown Resorts by Wynn would be a positive for the American casino company, Fitch Ratings director Colin Mansfield separately told CNBC Wednesday. Most importantly, Wynn would gain new exposure to a market in which it does not operate — and take on Crown's 46-percent Australian market share.
Crown Resorts' portfolio of assets are also "high quality," which would fit in well with Wynn's existing portfolio, Mansfield said.
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