Wynn Resorts to Merge Digital Gaming Business into SPAC in Bet on Value


Leisure activities have improved for Wynn in Las Vegas.

Daniel Slim / AFP / Getty Images

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Wynn Resorts

Said it lost less money in the first quarter than in previous periods, thanks to improved leisure activities in Las Vegas, and unveiled a plan to merge its sports betting and online / mobile gaming businesses in a SPAC.

Based in Las Vegas

Wynn Resorts

(ticker: WYNN) lost $ 2.41 per adjusted share in the first quarter, down from a loss of $ 3.54 in the corresponding quarter a year earlier. Operating revenue for the quarter totaled $ 726 million, down 24% from $ 954 million a year ago.

“In a quarter still hampered by operational restrictions, WYNN’s domestic operations exceeded Street’s expectations while Macau fell slightly below,” Macquarie analyst Chad Beynon wrote in a research note. Macquarie has a neutral rating on the stock.

The stock was at $ 127.86 on Tuesday morning, up nearly 2% at the start of trading. As of Monday’s close, the stock has appreciated about 11% this year.

In addition to the results, the company announced Monday that its sports betting and i-gaming subsidiary, Wynn Interactive, will merge with a special purpose acquisition company.

Acquisition of Austerlitz Corp.

(AUS.U). Austerlitz is overseen by Bill Foley, a well-known investor who also owns the Vegas Golden Knights, an NHL franchise.

Once the transaction is completed, the sports betting and i-gaming entity will be called Wynn Interactive and will trade under the ticker symbol WBET. Under the structure of the deal, Wynn Resorts will own a 58% stake in the new company, but shareholders will not get any shares in the new entity.

Wynn CEO Matthew Maddox said Austerlitz would bring $ 640 million in capital to the new company. Wynn Interactive has approximately 300 employees.

Deutsche Bank Research analyst Carlo Santarelli wrote in a note Monday that Wynn “cautiously created a follow-up action to market its early online business.

Various casino operators have taken different approaches to their digital business.

Boyd Gaming

(BYD), for example, owns a 5% stake in FanDuel.

Caesars Entertainment

(CZR) recently announced that it has acquired William Hill (WMH, London), a UK sports betting company.

MGM Resorts International

has a joint venture with

Entain

(ENT.London), also a British company.

As for Wynn’s earnings, Maddox told analysts Monday night that the company sees sales momentum as the quarter progresses in its three main markets: Macau, Las Vegas and Boston.

Since then, he said, momentum “continues to pick up.”

In Macau, for example, the company generated $ 43.9 million in first-quarter profit before interest, taxes, depreciation and amortization, or Ebitda.

This improvement continued in April and May. During Golden Week, which was the first week of May in Macau, “we recorded $ 3 million in normalized Ebitda per day,” Maddox said, adding that it was “by far the amount. highest normalized profit “the company has generated since the beginning. of last year’s pandemic.

In 2019, the company made around 70% of its sales in Macau.

Wynn shifted some of his focus there from the VIP market, which was challenged during the pandemic, to premium and high-end mass customers.

Meanwhile, in Las Vegas, volumes began to multiply around March Madness, the national college basketball tournament. That activity has accelerated, Maddox said.

In April, the company’s revenue per available room in Las Vegas was up 50% from results for the first quarter of this year. “Retail revenues in April were the second best month on record” since 2005, Maddox added.

Slot machine revenues were also strong.

Another promising sign for Wynn is hotel occupancy rates, which are expected to be in the 90% range over the coming weekends, Maddox said.

The company’s group operations, a key driver of midweek sales, “hold steady and look pretty strong for the second half of the year,” he said.

The group’s activities, conventions and trade shows have come to a standstill during the pandemic, and it remains to be seen how quickly those customers will return to Las Vegas.

Write to Lawrence C. Strauss at [email protected]


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