The proposed $10 billion takeover of the Packer-owned Crown casinos by Las Vegas gaming giant Wynn Resorts was almost over before it even began.
Just hours after it created a media storm in Australia, Wynn issued a public statement saying it had withdrawn the offer due to “premature public disclosure”.
The stunt left many scratching their heads. Did someone in Crown really botch the deal or was there something else going?
PR strategist Greg Baxter, a partner at Newgate Communications, believes it to be the latter, telling Your Money Live that the “extraordinarily strange” episode likely served an ulterior motive.
“You’ve got to assume something else is going on. That something else could be another bidder that Crown is trying to bring into the game to provide some competitive tension or to get Wynn to finally make a decision,” Baxter explained.
Part of the peculiarity was that Crown and Wynn had been in confidential talks for months prior to it being called off on Tuesday following the publicity.
“It wasn’t the first proposal. Crown had rejected an earlier proposal so you would have to assume that this latest proposal was a sweeter deal than the earlier one,” Baxter said.
“There was no obvious upside for Crown or Wynn to leak this information.”
So what actually happened?
Baxter believes that the secret lies in Crown’s unnecessarily detailed statement to the ASX, issued immediately after the story was first leaked.
“The detail suggests to me that Crown wanted all of that information out in the public, in other words in the market,” he said.
“It puts a floor under the price for the business and sends a signal to any other potential bidders that, ‘we’re for sale at the right price and by the way, this is the price’.”
Despite the scrapping of a potential deal for now, it likely won’t be the last we hear about it, as James Packer looks to step away from the public eye.
“[The deal] made sense. It makes great sense for Wynn [and] it makes fabulous sense for James Packer, who is a very clever and resilient businessman,” Baxter said.
The offer would have paid Packer in both cash and a sizeable number of shares in Wynn.
“This is a great way for him to retain a stake in a business that he knows very well and that he’s very attached to without having to deal with any of the public paraphernalia that goes with it,” Baxter added.
As for future deals, any sale of Crown could end up exceeding the latest $10 billion offer.
“If he hangs on a bit longer, the business will be worth more because when Barangaroo is finished you could probably add another $2 billion to the valuation of the business,” Baxter said.
“I don’t think there’s any downside for James Packer to be honest.”
Watch the full interview with Greg Baxter above.