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Is MGM Resorts Mulling Over the Wynn Resorts Acquisition?

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Reportedly, MGM Resorts International (MGM - Free Report) might acquire Wynn Resorts, Limited (WYNN - Free Report) . In this regard, the company has approached Wynn Resorts through back-channel process, per New York Post. However, shares of MGM Resorts and Wynn Resorts have declined 4.1% and 1.5%, respectively, on Apr 6, 2018.

Per the sources, there is a 50% possibility that the deal might fall in place in the coming few months. In February, James Murren — MGM Resorts’ CEO — had said that the company does not intend to acquire Wynn Resorts.

Notably, Wynn Resorts has become the target of acquisition, following the resignation of Steve Wynn, the CEO and founder of Wynn Resorts. In February, this casino tycoon had to step down after several women complained that they were harassed or assailed by Wynn. However, Wynn denied the allegations on the same day stating that, "the idea that I ever assaulted any woman is preposterous."

We believe the acquisition of Wynn Resorts will not only drive MGM Resorts’ top and bottom line but will further solidify its position in the gaming industry. This is because, Wynn Resorts — one of the leading companies in the gaming and lodging industry — is well poised to grow strategically. Also, it  is well-positioned to gain market share with the gradual revival of the U.S. economy. Given Wynn Resorts’ strong brand name, the company seems to be in a better positioned to command a premium rate relative to its peers in the gaming and lodging industry.

Stock Performance

In the past six months, shares of MGM Resorts have rallied 12.2% compared with the industry’s gain of 3%. Given the continued improvement in the Las Vegas business and improving gaming trends in Macau, the stock is expected to perform well in the upcoming quarters.

The company’s superior business model, extensive non-gaming revenue opportunities, high-quality assets and attractive property locations also bode well. Moreover, MGM Resorts has taken various initiatives to align every recognized brand into one global entertainment brand over the past few years. This, in turn, resulted in a disciplined business model with a unified view of strategy.

Zacks Rank & Key Picks

MGM Resorts has a Zacks Rank #3 (Hold). Better-ranked stocks from the same space are The Stars Group Inc. (TSG - Free Report) and Caesars Entertainment Corporation (CZR - Free Report) . Both the stock carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of The Stars Group have gained 29.1% in the past six months.

Caesars Entertainment has delivered a positive earnings surprise of 7.7% in the preceding quarter.

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