Wynn Cancels Interactive Spinoff and Changes Marketing Strategy
Wynn Resorts (NASDAQ: WYNN) and Austerlitz Acquisition Corporation (NYSE: AUS) have announced that they have canceled the planned deal that would have seen the Wynn Interactive subsidiary spin-off merge with Austerlitz and go public on the Nasdaq Stock Exchange.
The new chief executive of Wynn Interactive, Craig Billings, said that the decision was made as the company has chosen to pursue a new strategy for its online WynnBet brand. The strategy will involve less spending on marketing so according to Billings, it does not fit with the capital-intensive approach that the merger would have offered.
With our continued roll out of product features and planned new state launches, including New York, we remain excited about WynnBET’s future. As we discussed on the Wynn Resorts, Limited third quarter earnings conference call earlier this week, in light of elevated marketing and promotional spend in the sports betting industry, we are pivoting our user acquisition efforts to a more targeted ROI-focused strategy. In so doing, we expect the capital intensity of the business to decline meaningfully beginning in the first quarter of 2022. WynnBET’s best days lie ahead of us.
In May, Wynn agreed to spin off its Wynn Interactive subsidiary, which would then combine with Austerlitz, a SPAC founded by William P. Foley II, which would allow the business to be listed on the NASDAQ. It was planned that Austerlitz’s $640 million cash reserves would “help fuel growth”.
It was predicted that the combined company would have a post-transaction value of $3.2 billion, 4.5 times the revenue projected by Wynn Interactive by 2023.
However, Billings has since said that Wynn will not be pursuing an approach that required large amounts spent on marketing. He said that while sports betting is a high-growth market, the marketplace is highly competitive with numerous operators spending heavily on marketing and pushing up the acquisition cost.
Instead, Billings explained that Wynn is changing its approach to that of scaling “taking a more measured and long-term focus to grow healthy and sustainable business.”
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