Wynn, MGM Plan Japan IPOs to Fund Expansion in Asia Push

Wynn Resorts Ltd. and MGM Resorts International, Las Vegas-based casino operators, intend to conduct initial public offerings for planned Japan resort ventures to help boost their profiles in the country.

Wynn is “actively looking” for equity partners for a planned integrated resort in Japan and would eventually list the venture, President Matt Maddox said in an interview in Tokyo yesterday.

Wynn, MGM and each of their biggest competitors have said they’re prepared to spend billions of dollars to build gambling resorts in Japan, which is considering a bill to legalize casinos. Wynn sold shares in its Macau unit in a 2009 IPO and has boosted revenue from its operations in China’s only legal gambling hub eight-fold since 2005.

“We’re absolutely considering an IPO in Japan, but not initially,” MGM Chief Executive Officer James Murren, 52, said in an interview in Tokyo yesterday. “The best model is to put together an ownership group, finance through equity partners, open the facility, generate a strong track record of performance. We did that in Macau.”

Maddox and Murren spoke yesterday at the Japan Gaming Congress in Tokyo, where casino executives gathered with Japanese lawmakers discussing a bill to legalize casinos in the country. Japan’s gambling resort market could be worth as much as $40 billion a year as early as 2025, making it Asia’s largest after Macau, according to estimates from CLSA Ltd.

Japan Roots

Planned share sales “will show that their businesses are transparent and will be rooted in Japan,” said Toru Mihara, director of The Institute of Amusement Industry Studies at Osaka University of Commerce. “It could also be interpreted as their moves to put pressure on Japan to pass the bill quickly.”

An IPO “will be our goal not only to create financial flexibility, but also to give a broader group a sense of ownership,” Murren said. “We would encourage Japanese ownership through a public listing.”

MGM, the biggest operator of casinos on the Las Vegas Strip, has held talks with real estate developers and companies including Sony Corp. and Panasonic Corp. for possible partnerships to build gambling resorts with hotels, shopping and entertainment, Murren said, without naming other potential partners.

Ayano Iguchi, a spokeswoman for Sony, declined to comment. Chieko Gyobu, a Panasonic spokeswoman, couldn’t comment immediately.

‘Social Sensitivity’

“The idea of partnering is critical and it’s not for the money,” Murren said. “It’s more for the intellectual capital of what they bring to the relationships in terms of ideas, context of social sensitivity.”

Wynn Chairman Steve Wynn, 72, has had talks with several Japanese companies about building a casino in the country, he said yesterday in Macau. Wynn is seeking to expand to the world’s third-largest economy partly to diversify from a growing dependence on Macau, where limited land and a labor shortage pose challenges for expansion.

He declined to comment on a legal dispute with Kazuo Okada, a former 20 percent stakeholder and director of Wynn.

Wynn sued the 71-year-old chairman of Tokyo-based pachinko machine maker Universal Entertainment Corp., and forcibly redeemed his stake in the Las Vegas-based casino operator. The suit claims Okada jeopardized Wynn’s casino license by making improper payments to officials in the Philippines, where the Japanese billionaire is planning to build a casino resort. Okada has countersued, saying his stake was improperly redeemed.

Wynn would be competitive in Japan, partly because it’s compatible with Japanese traditions, Maddox said.

“Japan is known for hospitality, high quality and precision,” Maddox said. “The culture of almost perfection here fits very well with Wynn and its details-oriented focus. That would allow Wynn to be a strong contender in the Japanese market.”

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