MGM and Wynn Resorts Merger Remains a Question

With the casino industry in the US experiencing uncertain times, there was speculation that MGM Grand and Wynn Resorts were set to merge.

Macau has taken over the global gaming throne years ago, which has in effect left Las Vegas in second place trying to catch up with all the big boys in the Far East. However, not everybody suffers the ill fate of the US casino mecca, as there were some gaming companies that identified the need to expand to Macau, according to recent gambling news.

• Jim Cramer holds no real proof of a merger
• Wynn and MGM would have a combined value of USD 22.5b
• Analysts report Macau is on the rise

The two most prominent casino groups are MGM Grand and the lavish Wynn Resorts, and both of these have their establishment in Las Vegas and the former Portuguese colony. Jim Cramer, a regular host for CNBC and financial commentator, made some rather pressing remarks about the future of the two respective casinos. He made a statement that Wynn Resorts and MGM Resorts International “might merge” and that the “speculation” about it is rife.

Jim Cramer started the initial rumors

Presently, it is not clear which company will be the buyer and which one will have to give in to being absorbed. There is actually no real indication that a merger is going to take place, as no sources have been uncovered to discern the truth of the matter. The gaming analysts at Wall Street who are devoted to such potential deals, paid no serious attention towards the remarks made by Cramer, internet casinos report.

Representatives from both companies took immediate action to pour cold water on any speculation regarding their rumored merger. The spokespersons of Wynn Resorts and MGM Resorts, Michael Weaver and Clark Dumont respectively, stated their opinions on the matter by laughing it off and even declined to make any comments. The popular multimedia and financial-services firm known as Motley Fool took the whole speculative story as an ordinary joke.

Writer Travis Hoium stated that this story is rather fun and ought not to be taken too seriously, while a merger between the two gaming firms is quite unlikely at this stage. “It may be fun to speculate about a deal between Wynn and MGM, but at this point it’s unlikely that one is imminent.” Industry analysts believe that there are certain elements that cannot be disclosed to the public which could potentially endanger any deal, if it were to actually be happening.

Wynn Resorts and MGM are heavily involved in main their business areas, which focus on Las Vegas and Macau. They were in fact one of the first ones to have casinos and resorts in both the US and the special administrative region. However, these two cities are not the end of the line for such grandiose companies, according to mobile betting sites. They have set their sights on making further developments on home soil, with the planned area being Massachusetts. This would bring much needed additional revenues to them, as Las Vegas seems to be somewhat uncertain at the moment.

The speculative merger would be colossal

Overall, Wynn and MGM stand to make millions of dollars if they were to actually join forces. Their combined market capitalization would be set at a massive USD 22.52 billion and would see them generate jaw-dropping cash flow figures of around USD 4.04 billion. However, if they were to strike a partnership, there also would be side-effects to that. Their overall debt numbers would be more than USD 19 billion, a figure that is currently linked with Caesars Entertainment.

Although many in the gaming and financial world believe this to be nothing more than mere non-founded rumors, the announcement has seen some positive changes on the stock market. The shares of Wynn Resorts went up a cool 7% as a direct response to Cramer’s comments last week. Right before the value of the company shot up, Joe Greff, JP Morgan’s gaming analyst, stated to investors that Wynn Resorts were in fact an undervalued stock and could represent a great earning opportunity.

Previously during the week, Wynn’s stock dropped below USD 100 per share, which represented the firm’s lowest price in a period of five years. Unlike Cramer’s remarks, that didn’t have any real basis or proof, Greff’s insights were taken a bit more seriously. Recently, Macau announced that they will be focusing on the catering and tourism industry more in the coming years in efforts to generate revenue, as they gaming results have not been great.

The stock market reverberated positively to the news, which saw the shares of Wynn, MGM and Las Vegas Sands all rise. Credit Suisse based in neighboring Hong Kong believes that Macau will be experiencing more fortunate times in the imminent future, thanks to the Macau gambling laws that green-lit new developments that are aiming to concentrate on bringing in non-gaming visitors.