The entertainment industry giant Crown Resorts has confirmed the media reports about Wynn Resorts Limited putting a confidential takeover proposal to Crown. The news sent the stock to sky-rocked by 19.676% in a day-trade.
In the announcement dated 9 April 2019, Crown Resorts Limited (ASX: CWN) lifted the lid on its ongoing discussions with Wynn regarding the Wynn’s proposal to acquire Crown by the scheme of arrangement for a combination of cash and Wynn shares at an implied value of A$14.75 per share.
Crown Resorts stated that this discussion relates to the potential change of control transaction following the proposal tabled by Wynn to Crown. So far, it has officially been kept undisclosed due to the preliminary nature of the discussion.
The offer defines the proposed consideration of 50% in cash and 50% in Wynn shares with an implied value of A$14.75 per share at a fixed exchange ratio of 0.042 Wynn shares per Crown share, calculated on the basis of volume weighted average price for Wynn shares immediately prior to the announcement of an agreed transaction.
As per the company’s information, Ashurst has been appointed as a legal adviser and UBS and Goldman Sachs as financial advisers to Crown.
The report read that the proposal is confidential, preliminary, non-binding and indicative, subject to several conditions including due diligence, regulatory approvals and shareholders approvals. Further, the company clearly stated that there is no certainty that these discussions will result in a transaction as the discussion is at its preliminary stage and no agreement has been reached between Crown and Wynn with respect to value, structure or terms of a transaction.
For the half year ended 31 December 2018 Crown reported a net profit of $174.4 million, compared to $249.5 million in the prior comparable period which included a net significant item gain of $93.8 million. Total normalised revenue across Crown’s Australian resorts decreased by 1.2% on the pcp.
On the segmental front, main floor gaming revenue edged up by 0.9%, with marginal revenue growth in Melbourne offset by continued softness in Perth. VIP program play turnover across Crown’s Australian resorts of $19.9 billion was down 12.2% on the previous corresponding period. It had a net operating cash flow for the period of $382.3 million compared to a net operating cash flow of $368.5 million in the previous corresponding period.
As at 31 December 2018, the Group’s net cash position stood at $7.5 million consisting of total debt of $1,091.2 million and cash of $1,098.7 million. This reflects the company’s net capital expenditure of $209.3 million, net proceeds for disposal of investments of $6.9 million, dividend payments of $205.9 million and share buyback payments of $131.4 million.
CWN last traded at $14.050, up 19.676%, on 9 April 2019. Its price to earnings multiple stood at 16.280x with a market capitalisation of $7.95 billion.
Over the past 12 months, the stock has declined by 7.70% including a negative price change of 2.33% in the past three months.
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