Crown Resorts share price up 20% on Wynn Resorts takeover approach

The Crown Resorts Ltd (ASX:CWN) share price has rocketed 20% higher after receiving a $14.75 per share takeover approach from Wynn Resorts…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Crown Resorts Ltd (ASX: CWN) share price has been the best performer on the ASX 200 by some distance on Tuesday after the casino and resorts operator confirmed that it has received a takeover approach.

At the time of writing the Crown Resorts share price is up a whopping 20% to $14.08.

What offer has been made?

This morning management revealed that U.S. giant Wynn Resorts has approached the company with a preliminary, confidential, non-binding and indicative proposal that values Crown Resorts at A$14.75 per share. This is a 25.5% premium to the last close price.

According to the release, Wynn is interested in acquiring Crown Resorts via scheme of arrangement for a combination of cash and shares.

At present the proposal contemplates an acquisition consideration of 50% cash and 50% shares. The exchange ratio will be fixed, using a volume weighted average price for Wynn shares, immediately prior to the announcement of an agreed transaction.

At the date of the proposal, the volume weighted average price of Wynn shares implied an exchange ratio of 0.042 Wynn shares per Crown share.

The proposal is of course subject to a number of conditions including due diligence, Wynn obtaining all necessary regulatory approvals, and a recommendation by the Crown Board.

At this stage the Crown board has not yet considered the most recent proposal from Wynn and advised that talks are at a preliminary stage and no agreement has been reached in relation to the structure, value or terms of a transaction.

Although the company warned that there is no certainty that these discussions will result in a transaction, this hasn't stopped some investors from snapping up shares today in anticipation of a deal being done.

What now?

Given that Crown Resorts' shares were trading as high as $14.59 in August but have come under pressure due to tough trading conditions which are likely to be only temporary, I feel this approach is extremely opportunistic.

Furthermore, I don't believe it takes into account the strong growth prospects the company has, especially given the opening of its mega resort in Barangaroo in 2021.

Overall, I'm hopeful the board rejects the approach and the company remains trading on the ASX along with industry peers Star Entertainment Group Ltd (ASX: SGR) and SKYCITY Entertainment Group Limited (ASX: SKC).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. The Motley Fool Australia has recommended Sky City Entertainment Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Mesoblast share price rockets 36% on breaking FDA news

ASX investors are sending the Mesoblast share price soaring following promising FDA news.

Read more »