Wynn in talks for MGM to ac­quire Mass. casino

Las Vegas Review-Journal - - FRONT PAGE - By Richard N. Velotta Las Ve­gas Re­view-jour­nal

Wynn Re­sorts Ltd. and MGM Re­sorts In­ter­na­tional have had talks about Wynn sell­ing its yet-to-open $2.6 bil­lion En­core Bos­ton Har­bor to MGM.

The com­pa­nies is­sued a joint state­ment Fri­day af­firm­ing the con­ver­sa­tions, hint­ing they could be on­go­ing, but not say­ing what, if any­thing, would hap­pen next.

The state­ment also didn’t ad­dress a prospec­tive price of the trans­ac­tion or how MGM would pay for any deal. MGM is in the midst of a cost and ex­pense re­duc­tion strat­egy it calls MGM 2020 to im­prove cash flow by $300 mil­lion a year by 2021, re­sult­ing in the lay­off of dozens of em­ploy­ees.

The com­pany also an­nounced Thurs­day that it an­tic­i­pates “pos­si­bly”

spend­ing up to $800 mil­lion by next May in the set­tle­ment of law­suits from the Oct. 1, 2017, shoot­ing at Man­dalay Bay that killed 58 peo­ple.

Any deal would be fraught with reg­u­la­tory road­blocks, the big­gest of which could be Mas­sachusetts’ rule pro­hibit­ing one com­pany from own­ing more than one casino in the state.

MGM opened MGM Spring­field in the western part of Mas­sachusetts in Au­gust.

Wynn has weath­ered its own strug­gles, be­ing fined a record

$35 mil­lion by the Mas­sachusetts Gam­ing Com­mis­sion in April for the com­pany’s fail­ure to act on ac­cu­sa­tions of sex­ual ha­rass­ment by its for­mer chair­man and CEO, Steve Wynn, and for fail­ing to dis­close a set­tle­ment in one case. Steve Wynn has de­nied all ac­cu­sa­tions that he ha­rassed any­one.

Wynn Re­sorts, which was al­lowed to keep the li­cense it first won in 2013, has un­til May 30 to de­cide if it will pay the fine or ap­peal the com­mis­sion’s sanc­tions in court.

Open­ing un­af­fected

The joint state­ment from Wynn and MGM ac­knowl­edg­ing talks says the con­ver­sa­tions won’t af­fect the planned open­ing of the prop­erty in Ev­erett, Mas­sachusetts, in June.

“Over the past sev­eral weeks, we have en­gaged in con­ver­sa­tions around the po­ten­tial sale of En­core Bos­ton Har­bor,” the state­ment says. “They are very pre­lim­i­nary and of the na­ture that pub­licly traded cor­po­ra­tions like ours of­ten en­gage in, and in fact when op­por­tu­ni­ties such as this are presented, we are re­quired to ex­plore. We can­not say to­day where these con­ver­sa­tions will lead, how­ever we can reaf­firm our commitment to the com­mu­ni­ties where we op­er­ate to­day.”

The state­ment said the peo­ple of Spring­field and Ev­erett wel­comed them into their neigh­bor­hoods and that both com­pa­nies take se­ri­ously the re­spon­si­bil­ity of their priv­i­leged li­censes.

Some an­a­lysts spec­u­lated in

March 2018, af­ter Steve Wynn di­vested his hold­ings in the com­pany and the com­pany’s stock price plum­meted, that MGM could be a prospec­tive suitor for the prop­erty.

Matt Mad­dox, then the newly ap­pointed CEO for the com­pany in April 2018, put those re­ports to rest by say­ing Wynn had no in­ten­tion of sell­ing the 671-room re­sort to MGM or any­one else. Mad­dox was among the Wynn ex­ec­u­tives that scouted a lo­ca­tion for the Mas­sachusetts prop­erty and en­tered the agree­ment with Ev­erett in 2014.

The Mas­sachusetts law that pro­hibits mul­ti­ple prop­erty own­er­ship isn’t that un­com­mon, ac­cord­ing to UNLV law pro­fes­sor An­thony Cabot, who ex­plained that it’s a reg­u­la­tion de­signed to pre­vent mar­ket mo­nop­o­liza­tion and to pro­mote com­pe­ti­tion.

In Mas­sachusetts, the state is al­low­ing only three casino re­sorts and one slot ma­chine par­lor. In ad­di­tion to the prop­er­ties in Spring­field and Ev­erett, one more li­cense for a re­sort may be is­sued in the south­east­ern part of the state. The slot par­lor in Plain­ridge Park is op­er­ated by Penn Na­tional Gam­ing, op­er­a­tors of the Trop­i­cana and M Re­sort in Las Ve­gas.

Other com­pli­ca­tions

While the Mas­sachusetts Gam­ing Com­mis­sion would have to ap­prove any trans­fer of gam­ing li­censes, a swap in prop­erty own­er­ship could have other com­pli­ca­tions.

Both Wynn and MGM have signed agree­ments with their host com­mu­ni­ties, Ev­erett and Spring­field. It’s un­clear if those cities would ob­ject to new own­er­ship for their re­spec­tive casino prop­er­ties.

MGM, which stands to cap­i­tal­ize on the growth in sports wa­ger­ing if and when Mas­sachusetts le­gal­izes it, bol­stered its pres­ence in the Bos­ton area in March when it signed a mul­ti­year gam­ing part­ner­ship deal with the Bos­ton Red Sox Ma­jor League Base­ball team.

The stock prices of both Wynn and MGM took hits in Fri­day trad­ing.

MGM closed down 64 cents,

2.4 per­cent, then fell an­other 56 cents, 2.2 per­cent, to end at

$25.33 a share on vol­ume slightly above the daily av­er­age.

Wynn plunged $5.89, 4.6 per­cent, then gained back 3 cents, less than 1 per­cent, af­ter hours, ending at $131.42 a share, also on vol­ume slightly above nor­mal daily av­er­ages.

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