Nomura dissects Wynn-MGM deal in Boston

|About: MGM Resorts International (MGM)|By:, SA News Editor

Nomura Instinet runs through the scenario where a deal by Wynn Resorts (WYNN -1.8%) to sell its Encore Boston Harbor casino is pulled off with MGM Resorts (MGM -1.8%) and the help of MGM Growth Properties (MGP -0.5%).

MGP: "If MGP buys the assets for 13.5x rent at 1.8x coverage, assuming $300mn of post ramp EBITDAR, and issues stock at its current multiple of ~15x or finances the deal with debt, the transaction would be accretive and positive for MGP shareholders."

Wynn: "If WYNN sells the casino at anywhere around $3bn, it records a $200-400mn (+/-) pretax profit, and strengthens its balance sheet, that would be positive for its shareholders."

MGM: "For MGM, it acquires a unique stream of urban EBITDA projected at $300mn annually (once ramped +/-) with no competitive threat for under 8x EBITDAR, and it’s FCF accretive to its shareholders by $0.10/sh."

No deal can make it to the finish line unless the Everett City Council and state regulators approve, notes the Nomura analyst team of Harry Curtis, Daniel Adam and Brian Dobson.

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