{"id":21475,"date":"2018-04-09T09:25:34","date_gmt":"2018-04-09T17:25:34","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=21475"},"modified":"2018-06-12T08:55:09","modified_gmt":"2018-06-12T16:55:09","slug":"wynn-out-mgm-in-is-history-repeating-itself","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wynn-out-mgm-in-is-history-repeating-itself\/","title":{"rendered":"Wynn out, MGM in: Is history repeating itself?"},"content":{"rendered":"

Remember when Kirk Kerkorian<\/strong> made Steve Wynn an offer he couldn’t refuse for Mirage Resorts<\/strong>? It looks like history is going to repeat itself with “back-channel approaches<\/a>” being made by MGM Resorts International<\/strong> to embattled Wynn Resorts<\/strong>. “Wynn Resorts \"\"is not on the block, but one source close to the situation said the company\u2019s new CEO would sell if he got the right price,” reports the New York Post<\/em>. A source described as “close to a large gaming company” opined that there’s a 50\/50 chance that Wynn CEO Matt Maddox<\/strong> gets the price he wants. Added a banking source,\u00a0\u201cYeah, MGM is interested.\u201d All this taking place amid disparaging remarks about Wynn’s “caretaker management team,” which appears not to have inspired great confidence on The Street.<\/p>\n

Two vacancies on the Wynn board are going unfilled, leading one source to remark,\u00a0\u201cThat inference corroborates to me that there will be a sale. Any weakness that could evolve over time is less visible today than it will be a year from now.\u201d MGM is carrying a lot (to put it mildly) of debt but could probably clinch the deal with help from its REIT, MGM Growth Properties<\/strong>. The Post<\/em> points to a potential downside for MGM: Most of Wynn’s revenue comes from Macao<\/strong>, where its concession could be nationalized in 2022. While that formerly seemed a long shot, Donald Trump<\/strong>‘s trade war with China<\/strong> changes the complexion of the situation greatly, especially when you consider the massive amounts of money MGM and Wynn are taking out of the country.<\/p>\n

It should also be added that MGM CEO Jim Murren<\/strong> formerly said<\/a> of a Wynn takeover, “It would be difficult to believe anyone is going to have \"\"the financial wherewithal to make a serious bid. It would behoove Murren to strike sooner rather than later because, if Wynn survives investigations in Macao, Nevada<\/strong> and Massachusetts<\/strong>, it becomes a less vulnerable asset. (The stock price has yet to recover from Steve Wynn<\/strong>‘s disgrace.) Genting Group<\/strong> is tipped by one source as a possible buyer but it can’t even get out of the starting blocks with Resorts World Las Vegas<\/strong>, so we’re skeptical it could pull the trigger on a Wynn takeover — nor get the financing to make it happen. Genting’s rationale isn’t even to get quickly into Las Vegas but to enter Macao by was of a detour through Las Vegas Boulevard<\/strong>.<\/p>\n

Las Vegas Sands<\/strong>, sitting on a $55 billion market capitalization, could make life difficult for MGM. This could also be the moment when we find out whether Galaxy Entertainment<\/strong> Chairman Francis Lui<\/strong> was on the level when he called his company a “passive investor” in Wynn. Stock-picker Howard Jay Klein<\/strong> isn’t sold on a Wynn\/MGM merger. Instead, he writes that Sands “offers the best strategic, financial, \"\"operational and corporate culture fit for both companies. I continue to believe that to be the case.” (Klein is a man after our own heart, referring to Japan<\/strong>‘s Liberal Democratic<\/strong> and Komeito<\/strong> parties as “ever diddling” when it comes to casino legalization.) Adding that “anyone who presumes to predict the erratic inner scuffling of officialdom in such cases, must honestly caution that there is always an element of astrology in these political decisions,” Klein nevertheless reads the stars and sees Sands getting the first foot in the Japanese door with an Osaka<\/strong> megaresort.<\/p>\n

Opines Klein, “the MGM rumors, probably resulting from chin scratching idle conjecture by some industry sources, is the origination point of the Post<\/em> story, not the beginning of a deep dive into looking at a \"\"deal by MGM\u2019s top management.” He says that for MGM to widen its exposure on the Las Vegas Strip<\/strong> “makes zero sense,” although that has been a leitmotif<\/em> of the Murren era. Citing the downfall of Caesars Entertainment<\/strong>, Klein writes, “[MGM] is beginning to resemble a hungry guest at a buffet whose eyes widen and plates get heavier, passing up no treat on the groaning board. Strategically, it just makes better corporate sense for MGM to begin ingesting what it has already piled up on its plate lest it get an attack of indigestion triggered by debt among other problems.”<\/p>\n

Klein is more impressed than most with the Wynn Resorts management team, which he says absorbed a lot of hard knocks from the former, micromanaging boss. In this he likens it to the Sands corporate culture \"\"(he seems to find MGM’s ploddingly prosaic), writing, “Sheldon Adelson<\/strong>\u2019s team meeting Steve Wynn\u2019s team will advance on what is by any measure a tough enough chippy elbows game to begin with common in all mergers.” He also likes the makeup of a Wynn\/Galaxy combination, especially if Galaxy buys Elaine Wynn<\/strong>‘s 9% WYNN stake. Saying of Wynn Resorts stock, “It doesn’t rally 10 bucks in one session idly for nothing,” the ever-excitable Jim Cramer<\/strong> said Wynn Resorts\u00a0is primed for takeover<\/a>, especially with Steve Wynn out of the picture.<\/p>\n

It would put a lot of middlemen out of jobs, says University of Nevada-Las Vegas<\/strong> pundit David Schwartz<\/strong>. Wynn itself issued a quasi-denial<\/a> denial, saying\u00a0“Wynn has not had any discussion with MGM or its advisors about a sale of the company.” Murren also demurred, via the pages of Bloomberg<\/em>. Yes, but what about everyone else?<\/p>\n

One obvious stumbling block to any Wynn\/MGM deal is Wynn Boston Harbor<\/strong>. MGM is barred from owning two casinos in Massachusetts, although perhaps it runs the purchase through MGM Growth Partners<\/strong> and leases it to a third-party operator … assuming the Massachusetts Gaming Commission<\/strong> is taken in by the legerdemain. It might not even get that far. Bloomberg<\/em> reports that \"\"Maddox is shopping Wynn Boston Harbor around<\/a>, which makes sense given the amount of grief it’s causing for the company. At this point, Wynn is in for $1.1 billion. Sheldon Adelson could more than cover that with the proceeds from the Sands Bethlehem<\/strong> sale. Adelson’s shown no interest in Massachusetts but, considering his love-hate relationship with Bethlehem<\/strong>, maybe the Dorchester<\/strong> native wants to go home again. Hard Rock International<\/strong> also has a billion to spend<\/a> from the sale of Hard Rock Rocksino<\/strong> and if Galaxy is pursuing American investments, this would be an easy way to get into the Yankee market, assuming it passes regulatory muster.<\/p>\n

* Are Paul and Sue Lowden<\/strong> calling its quits? Not as a married couple but as the operators of the Pioneer Hotel & Gambling Hall<\/strong>. I’m \"\"reliably informed that “the Pioneer is discontinuing all of its chips, tokens and slot points as of the end of the month.” It’s also conducting a series of progressive drawings, presumably to spend down any cash remaining from un-hit progressive jackpots. If the Lowdens aren’t going out of business they’re giving a convincing impression of it. And, since we’re talking about Sue Lowden, how many chickens does it take to buy the Pioneer?<\/p>\n","protected":false},"excerpt":{"rendered":"

Remember when Kirk Kerkorian made Steve Wynn an offer he couldn’t refuse for Mirage Resorts? It looks like history is going to repeat itself with “back-channel approaches” being made by MGM Resorts International to embattled Wynn Resorts. “Wynn Resorts is … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":15390,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[46,42,237,201,120,165,7,171,49,62,112,11,207,71,95,33,25,232,32,9,38,233],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/21475"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=21475"}],"version-history":[{"count":3,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/21475\/revisions"}],"predecessor-version":[{"id":21871,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/21475\/revisions\/21871"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media\/15390"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=21475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=21475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=21475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}