Galaxy Entertainment has bought a stake of just under 5 percent in Wynn Resorts from the company’s founder Steve Wynn, calling the purchase a “unique investment opportunity.”
The Macau-based operator bought a total of 5.3 million shares at $175, resulting in gross proceeds of $927.5 million to Wynn.
Steve Wynn also sold a further 4.1 million shares in the open market at $180 a share and a further 8 million shares in privately negotiated transactions with existing shareholders.
As a result, Wynn has divested his entire stake in the company.
“This is a unique opportunity to acquire an investment in a globally recognized entertainment corporation with exceptionally high quality assets and a significant development pipeline,” Galaxy Vice Chairman Francis Lui said.
The announcement follows the settlement two weeks ago of long-standing litigation between Wynn Resorts and Universal Entertainment Corporation. The resolution of that litigation, combined with the new agreement with Galaxy and the liquidation of Steve Wynn’s shares in the company positions Wynn Resorts for even greater stability, strategic focus and future growth, the company said in a stock exchange filing.
Wynn Resorts CEO Matt Maddox, who took over earlier this year after Steve Wynn was forced to resign after allegations of sexual misconduct, said Wynn and Galaxy share “many of the same core operating philosophies and values.”
Union Gaming analyst Grant Govertsen upgraded his view of Wynn Macau stock to a buy after the investment, saying it may help take off some pressure over upcoming license renewals in Macau.
“We think the market was largely ignoring the significant risks to the Wynn Macau licenses should the company continue to operate as-is without a takeover or significant outside investment,” he wrote in a note. “That it is Galaxy that has struck first is an encouraging sign as it relates to mitigating the licensing risk overhang. For Galaxy, the acquisition of a nearly 5 percent stake in WYNN buys Galaxy time to get to the table and figure out a deal.”
Govertsen speculates that should the investment lead to a full-blown acquisition, Galaxy would likely sell off the U.S. assets and possibly also Wynn’s original property on the Macau Peninsula to focus on the Cotai Strip.