Article Published: December 11, 2024, 05:09h.
Last Updated: December 11, 2024, 05:09h.
Wynn Resorts (NASDAQ: WYNN) stock has seen a 10.09% increase in the last month. This period included news of a prominent investor increasing their stake in the casino operator. Despite this, some analysts are skeptical about the possibility of a takeover offer.
In a recent report to clients, GimmeCredit analyst Kim Noland noted that Tilman Fertitta’s increase in Wynn stake to 9.9% from 6.1% has positively impacted the shares. However, this doesn’t necessarily indicate intentions of shareholder activism or a takeover of the company.
Wynnʼs common stock moved higher upon a recent report that Tilman Fertitta, a well-known gaming executive and investor, has increased his passive holding to 9.9%,” wrote Noland. “We donʼt expect near term shareholder activism or a change in shareholder rewards.”
Following a November 13G filing with the Securities and Exchange Commission (SEC), speculation arose that Fertitta might make a bid for Wynn. The 13G filing, typically used by passive investors, could potentially lead to more activist measures.
Fertitta’s Interest in Wynn
With a history of acquiring stakes in companies like Morton’s Restaurant Group and McCormick & Schmick’s, Fertitta is known for turning passive investments into activist roles.
While there is a possibility of Fertitta being interested in acquiring Wynn, analysts believe this to be unlikely at present. Despite his interest in Las Vegas casinos, there is no indication that Fertitta is pursuing an activist position at Wynn or aiming for majority control.
There have been discussions about the potential for Fertitta to encourage Wynn to expand its brand in the US, where it currently operates three venues — Wynn and Encore in Las Vegas and Encore Boston Harbor.
As of now, the upcoming addition to Wynn’s portfolio is Wynn Al Marjan Island in the UAE. Fertitta ranks as the second-largest individual shareholder in the company after Elaine Wynn.
Positive Outlook for Wynn Bonds
Despite uncertainties around a takeover, other factors support the investment potential of Wynn’s credit and equity. These include a strong balance sheet, debt reduction efforts, and share repurchases.
“Wynnʼs global liquidity remains strong at near $3.5 billion, including cash and equivalents and revolver availability (Wynn extended near term maturity bank credit facilities),” added Noland. “At quarter end debt was $11.79 billion but on October 1, the company repaid the 4.875% senior notes due 2024 in the amount of $600 million and the remaining $600 million of Wynn Las Vegas senior notes due 2025, resulting in significant debt reduction. Wynn continues its shareholder dividend and recently increased its share repurchase authorization to $1 billion.”
Noland has a positive outlook on Wynn bonds maturing in 2031 with a coupon rate of 7.125%.