Wynn CEO Leaving, SPAC Deal Called Off: Is A Buyout Coming?

Two recent items for a casino stock could signal a buyout coming. Here are the details to consider.

What Happened: On Friday morning, Wynn Resorts WYNN announced it was terminating a previously announced SPAC merger for Wynn Interactive with Austerlitz Acquisition Corporation I AUS.

The deal was going to bring Wynn Interactive, which owns WynnBet and other assets, public in a move that would have seen Wynn Resorts maintaining a 58% ownership stake.

“With our continued roll out of product features and planned new state launches, including New York, we remain excited about WynnBet’s future,” Wynn Interactive CEO Craig Billings said. “WynnBet’s best days lie ahead of us.”

The called-off merger follows news that Wynn Resorts CEO Matt Maddox is stepping down.

Citron Research shared that the CEO transition could see Wynn Resorts getting bought out and be worth $165 a share.

“The $WYNN CEO transition is the ultimate ‘tell’ (from superstar to banker) that THE crown jewel of Vegas might finally be up for sale,” Citron Research said in a since-deleted tweet.

Maddox took over as the CEO in 2018 when company founder Steve Wynn departed. Maddox will be replaced by Craig Billings on Feb. 1. Billings is the current President of Wynn Resorts and also serves as the CEO and CFO of the Wynn Interactive unit.

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Why It’s Important: Wynn Interactive has access to a database of 13 million Wynn Reward members and access to state licenses. WynnBet covers 51% of the U.S. population with 15 states secured and an additional nine states in negotiations.

WynnBet is live in New Jersey and Michigan for online sports betting and iGaming and has online sports betting in Colorado, Virginia, Indiana and Tennessee.

The deal called off for Wynn Interactive being spun off could be particularly compelling with the head of that unit now taking over as CEO of Wynn Resorts and wanting to keep the business.

A couple of things could be in play here: a company wanting to buy all of Wynn Resorts including online sports betting, or online sports betting is the high growth area and the company needs to have control to help it grow.

Private equity names like Apollo Global Management APO and Blackstone BX are mentioned as suitors by Casino.org. Both private equity companies own Las Vegas strip venues and have added exposure to the sector.

WYNN Price Action: Shares are trading at $93.09 at the time of writing and have traded between $78.55 and $143.88 over the last 52 weeks.

Citron’s $165 price target represents around a 75% premium to today’s share price.