Capital Calls: Wynn bets too much on SPAC

Capital Calls: Wynn bets too much on SPAC

A man stacks chips on a black jack table at Japan Casino School in Tokyo, Japan August 4, 2018. Picture taken August 4, 2018. REUTERS/Toru Hanai

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TWO OF A KIND. If the house always wins in both casinos and special-purpose acquisition companies, then Wynn Resorts (WYNN.O) should be sitting pretty. The $15 billion company plans to merge its online gambling unit with Austerlitz Acquisition Corporation I (AUS.N). Separating the digital assets will reap fees and shares for the SPAC’s architects, and in theory lead to a richer valuation for Wynn’s fledgling internet business. DraftKings (DKNG.O) and gaming software provider Gan (GAN.O) are each valued at around 20 times historical sales, while Wynn fetches less than 7 times.

Wynn shareholders are placing a big bet. Their stake in the interactive business will shrink from 71% to 58%, or less as warrants allow for additional dilution later. Although digital wagers are growing fast read more , controlling as much as 15% of what Wynn Interactive reckons will be a $45 billion total addressable market sounds ambitious. If it can win that much of the pot, though, Wynn Resorts may not be playing its online cards right. (By Katrina Hamlin)

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