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Macau Buys Stake in Wynn Resorts Amidst Sex Scandal

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Published on:
Mar/24/2018

HONG KONG • Wynn Resorts' former chief executive Steve Wynn has disposed of his entire 11.8 per cent stake in the firm for US$2.1 billion (S$2.8 billion), in a dramatic exit of the casino and hotel enterprise he founded over 16 years ago.

In an unexpected separate move, Macau casino operator Galaxy Entertainment said it had agreed to buy 5.3 million primary shares of Wynn Resorts at US$175 a share, giving it about a 5 per cent stake in the operator, which has resorts in Las Vegas and Macau.

Galaxy is one of six licensed operators in the world's largest gambling hub of Macau, and competes with Wynn along with Sands China, MGM China, SJM Holdings and Melco Resorts.

The casino mogul's share sale comes a week after Wynn Resorts said Mr Wynn and his former wife Elaine, who has a 9.26 per cent stake, had scrapped a shareholder agreement that prevented them from selling their stakes.

Mr Wynn resigned as CEO of the Las Vegas-based company last month, following claims that he subjected women who worked for him to unwanted advances. He has denied the accusations.

In a joint statement by Galaxy and Wynn Resorts on Wednesday, Galaxy vice-chairman Francis Lui said it was a unique opportunity to "acquire an investment in a globally recognised entertainment corporation with exceptionally high-quality assets and a significant development pipeline".

Wynn Resorts CEO Matt Maddox said Galaxy shared many of the same core "operating philosophies and values".

The announcement also follows the settlement two weeks ago of longstanding litigation between Wynn Resorts and Universal Entertainment Corporation.

Wynn Resorts said two long-term institutional investors, currently holding stakes in it, have agreed to purchase the remaining eight million shares held by Mr Wynn, also at US$175 a share.

A Thursday filing showed that the embattled founder sold 4.1 million shares of Wynn Resorts at US$180 a share - effectively offloading his entire 12.1 million shares, or 11.8 per cent stake in the firm, for a total of US$2.1 billion.

Mr Wynn, who started in Las Vegas casinos in the 1960s, created some of Las Vegas' most iconic landmarks - the Mirage, Bellagio and Treasure Island. He was forced to sell his multibillion-dollar operation Mirage Resorts to tycoon Kirk Kerkorian in a hostile takeover in 2000. Mr Kerkorian then created MGM Mirage and Mr Wynn went on to create Wynn Resorts with his former wife in 2002.

The 76-year-old businessman, whose signature denotes the firm's logo, had built two lavish resorts in Macau.

Galaxy's octogenarian founder Lui Che Woo, one of Asia's wealthiest billionaires, has a net wealth of US$22 billion, according to Forbes. Mr Lui, who started his career in construction, has grown his casino company into one of Macau's biggest operators over the past decade.

Analyst Grant Govertsen of Union Gaming in Macau said: "There are other large gaming companies that do not have a presence in Macau, but which desperately want to be in Macau, and we would not be surprised to see them angling for a seat at the acquisition table too."

While Galaxy has been primarily focused on Macau with its three casinos, it received a licence this week to operate a roughly US$500 million resort in Boracay, the Philippines' most famous holiday island.

Wynn, which operates a resort on Cotai and Macau's main peninsula, focuses on premium and VIP customers, while Galaxy targets both the high-end segment and the broader mass. Both companies have reported strong earnings growth in the fourth quarter, with Galaxy posting a 67 per cent surge in profit last year.

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