Trump Wynn Talk AC Deal

Though they may be strange bedfellows, rumors of a partnership have sent Wynn Resorts stock soaring more than 10 percent during the last 48 hours.

At stake are billions in revenue and a chance to steal the market leadership mantle from the Borgata, a property owned by Boyd Gaming and MGM-Mirage that is widely credited with bringing Las Vegas style and sophistication to the Atlantic City gaming market.

According to a report appearing in the Newark Star-Ledger¬ earlier this week, the two were spotted together at a New York Mets last week to discuss what could be the fate of the Trump Plaza Casino. It looks as if the Las Vegas mogul would purchase the property, tear down the aging Plaza and reinvent the 12 acres which sit at the base of the Atlantic City Expressway.

Wynn is itching to get back into the nation’s second biggest casino gaming market now that it’s gone more upscale. Previously Wynn owned the Golden Nugget, which he sold in the late 1980s as he was developing the Mirage, which transformed the entire concept of what a casino resort should be. It paved the way for the modern Las Vegas that is seen today.

A long standing Las Vegas tradition of imploding old casinos and replacing them with new pillars of gaming is now coming to Atlantic City to create those more upscale and profitable properties. The Sands hotel and Casino is set for an appointment with the wrecking ball during the next year.

If the deal goes through, its rumored that Wynn will give up some land in Las Vegas to Trump, who has been working hard to expand his casino holdings beyond the east coast. Trump is also looking to get into markets such as Mississippi but has so far been thwarted in Pennsylvania and Rhode Island.

The extra cash in Trump’s coffers will make it easier for the financially strapped company to make deals in other markets. The company has only got out of Chapter 11 bankruptcy in May 2005 and is saddled with more than $1 billion in debt.

Sen. William Gormley, told the newspaper that he would like to see Trump and Wynn deal happen. "Given that we have a governor who understands Atlantic City and given two business people of their caliber, it would be great to see something happen," said Gormley. "It would be great for Atlantic City."

"We think a deal between Trump and Wynn makes sense for both organizations, said Steven Gart, an analyst with Nickel Capital to The Street. His firm owns Trump shares.
"However, given the move the stock has just made on this speculation, we're a little cautious on the upside from here given the competitive pressure in Atlantic City (during the third quarter)."

Wynn had planned to return much earlier to the market when he was Chairman and CEO of Mirage Resorts. His plan then was to build a trio of resorts in the Marina district. However, he sold out of the company. A portion of the empty land eventually was used -for the Borgata. Now speculation is current owner of the vacant parcel, MGM-Mirage Corp, is planning to build a scaled down version of its now under construction $7.5 billion Project City Center in Las Vegas.

One possibility is the two companies will partner up and redevelop the property together. The formula has proven successful with Borgata, which is co-owned by Boyd Gaming and MGM-Mirage Corp. 

Wynn Resorts is down slightly in today’s trading to 72.96, while Trump Entertainment Resorts has lost more than five percent of its value. It is currently trading for just under $20 a share.

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