Australia's Crown Resorts said on Tuesday it was in talks with Las Vegas rival Wynn Resorts about a potential A$10 billion (S$9.65 billion) buyout, sending Crown shares up more than a fifth.
"It's a preliminary-style bid which doesn't yet provide an adequate premium for control, and most would expect there to be both more debate about the strategic merit and pricing", said Angus Gluskie, managing director of White Funds Management, which also holds Crown shares.
Wynn is the world's second-largest casino company.
Crown said the talks with Wynn were at a preliminary stage and no agreement on value or structure had been reached. Crown had confirmed the talks overnight after the Australian Financial Review had reported on the potential deal Monday.
Buying Crown would also fit in with Wynn's strategy to diversify geographically to protect its growth prospects if its Macau licenses are not renewed.
Wynn's shares were down 3.5 percent after the termination, while Crown Resorts shares closed almost 20 percent higher at A$14.05, but below the proposed buyout price of A$14.75.
However, the United States company said on Tuesday afternoon: "Following".
Unlike its competitors who already have footholds elsewhere in Asia - from Las Vegas Sands Corp.'s Singapore resort to Melco Resorts & Entertainment Ltd.'s City of Dreams in Manila - Wynn is now confined to Macau, where expansion is approaching its limit. "Wynn would have gained favorable exposure to Crown's Sydney resort, opening in 2021, but would have had to contend with Australia's weak VIP betting trade".
Traditionally Australia's leading casino operator, Crown recently pulled back on its global expansion plans, including exiting its joint venture partnership with Melco Resorts in Macau and the sale of 34.6 acres of land on the Las Vegas Strip upon which it had planned to build an integrated resort called Alon.
Crown Resorts is controlled by Australian billionaire James Packer.
Crown sold its interests in joint-venture casinos in Macau soon after.
"I was surprised and the U.S. folks were surprised", the person said.
Packer quit the Crown board in March 2018 after a nightmare period for the third generation tycoon, which included a highly publicised split with Mariah Carey and legal dramas from his involvement in business deals in Macau.