Is Fertitta Eyeing A Full Takeover Of Wynn?

Written By Hill Kerby on December 5, 2022 - Last Updated on July 21, 2023
Is Fertitta looking at full buyout of Wynn?

Tilman Fertitta is increasing his footprint in the casino industry in a big way.

The owner of the Houston Rockets and Landry’s Inc., the hospitality enterprise and parent company behind Golden Nugget Casinos, purchased 6.9 million shares of Wynn Resorts in October for an estimated $385 million.

Fertitta is second-largest Wynn stockholder

There are no commercial casinos in Texas, nor is online casino gambling legal. Legislation to legalize casinos is expected to be introduced again in the next Texas legislative session in 2023.

In buying the Winn shares, Fertitta now owns 6.1% of the company and is the second-largest individual shareholder. Only Elaine Wynn, businesswoman and former wife of Steve Wynn, has a higher stake with 8.9%.

The investment brings speculation about Wynn’s future direction, too. Will Fertitta assume a hands-on role in the company moving forward? Or is he looking at his new asset as a passive investment?

Fertitta may have bought stock during a ‘dip’

Wynn Resorts’ stock has dropped steadily since the 2020 COVID-19 pandemic, largely struggling to rebound due to its Macao properties.

China, and therefore Macao, has a zero-tolerance policy for COVID-19. That results in lockdowns should any guest or staff test positive. This caused 12 days of forced closures in July, contributing to Wynn’s Q3 net loss of $142.9 million.

Those numbers are an improvement from 2021, though, when the company was $166.2 million in the red. But this entire period is a blip in Wynn’s profitable lifetime as a company. All signs point to more growth once pandemic days are entirely in the rearview.

John DeCree, an analyst with CBRE, values Wynn Resorts at $76 a share and targets a price of $100. Fertitta looks to have paid below $60 a share. That suggests he may have found a “dip” to buy relative to its long-term value.

Wynn Resorts CEO Craig Billings gave Fertitta “kudos” for acquiring stock at such a low price.

“All in all, I think it’s just a great recognition of the value of our equity. There’s not much more to say about that.”

Immediately following news of Fertitta’s purchase, Wynn’s share price rose nearly 10% to $63.90 by the close of the day.

In the two months since purchasing, Wynn’s stock prices have continued to climb to over $85 a share.

Fertitta’s history shows that he will be involved

Fertitta did not provide an official explanation for his acquisition, but he did not become the tycoon he is today by taking a back seat with his investments.

DeCree cited historical evidence that made him believe Fertitta’s purchase of Wynn stock could be the beginning of a buyout plan.

“While the filing signals a passive investment, Fertitta’s track record would suggest otherwise. We look to his prior acquisitions, including McCormick & Schmick’s and Morton’s Restaurant Group, both of which started with 13G (SEC) filings that culminated in a full takeover.”

DeCree added that a total Wynn overhaul would be much larger than either of the two restaurants mentioned above, but Fertitta has experience on such a scale, too. He purchased the Golden Nugget brand via Landry’s starting in 2005, and eventually took the entire company private in 2010.

Fertitta busy with lots of other projects

On top of Fertitta’s already robust portfolio, he recently purchased a beachfront resort in Laguna Niguel, CA, for an estimated $650 million.

He also serves on DraftKings’ board after agreeing to terms to bring Golden Nugget Online Gaming under the DraftKings umbrella this past May.

Biggest of all, Fertitta acquired six acres of land on the Las Vegas Strip. Clark County has already approved a 43-story, 2,420-room resort and hotel at the southeast corner of Las Vegas Boulevard and Harmon Avenue. The hotel would be his second Las Vegas property, along with the Golden Nugget, which is downtown.

Add in the prospect of a more significant role in Wynn’s operations, and Fertitta could quickly increase his presence among the most prominent players in Sin City.

Photo by Wayne Parry/Asociated Press
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Hill Kerby

Hill Kerby is a proponent of safe, legal betting, and is grateful to be able to contribute to growing the industry. He has a background in poker, sports, and psychology, all of which he incorporates into his writing for PlayTexas.

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