Troubled gaming company Wynn Resorts Ltd. (NASDAQ:WYNN) could be in play as an acquisition for rival MGM Resorts International (NYSE:MGM), according to the New York Post.
“The interest has come in the form of back-channel approaches,” sources familiar with the situation told the newspaper.
Wynn Resorts popped 1.5% on the news to US$183.60 in pre-market trading.
Two months after allegations of sexual misconduct surfaced, 76-year-old Steve Wynn sold his stake in the casino company that bears his name. Wynn was locked in an ugly, years-long courtroom battle with his ex-wife, Elaine Wynn, which unearthed sordid allegations of sexual misconduct and rape against the King of Las Vegas.
A bid from MGM could spur other casinos like Caesars Entertainment Corp. (NASDAQ: CZR) to make a play for Wynn Resorts. However, there is a complication everyone will have to wrap their heads around in valuing Wynn. The gaming company draws most of its riches from the Chinese island of Macau, and China can pull all gaming licenses, including Wynn’s, in 2022. Macau, a tiny former Portuguese colony is currently the only place in China where gambling is legal.
MGM, owner of 17 resorts in the US, including the crown jewels Belagio, Mirage and Mandalay Bay, and MGM Macau in China, can very well afford to buy the US$18.6 bln Wynn Resorts.
MGM Resorts International was founded in 1986 and is based in Las Vegas, Nevada.
Caesars Entertainment was down 13% or US$1.50 in pre-market trading.