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Steve Wynn Tells All About Desert Inn Deal, and His Future

Desert Inn owner Steve Wynn recently sat down for a nearly two-hour interview with me and Paula Francis of KLAS-TV Channel 8. It was the first interview he has granted since his company, Mirage Resorts, was acquired by MGM Grand and since he purchased the Desert Inn.

He talked about a variety of topics, from how the agreement was rapidly consummated between him and Kirk Kerkorian, how serendipity smiled on him in the purchase of the DI and how he feels about a panoply of political and gaming issues.

Following are portions of the interview, broken down by topics. Explanations of those topics are followed by excerpts from the transcript of the interview, some of which is still airing on KLAS and Las Vegas ONE.

How the deal happened

Wynn said Kerkorian called him at home one night in February and told him that Kerkorian was sending a letter making an offer on the company. Wynn told his wife, Elaine, who did not think Wynn would sell. "Would you?" she asked. "For the right price," Wynn said.

Wynn knew he would never take Kerkorian's offer of $17 a share. He controlled the Mirage Resorts board of directors, which rejected the offer on Feb. 28. He met with Kerkorian the next day in his office:

Steve Wynn: Kirk and friends of Kirk had twice asked me if I wanted to merge ... I never thought to ask if Kirk wanted to buy it ... for north of $6 billion. How many people would want to buy a gaming company (for that price?).

I was just getting ready to buy stock for myself when Kirk bought it. The lesson I learned is that I should own more of the company. (Wynn owned 14 percent of Mirage Resorts; Kerkorian owned just under two-thirds of MGM Grand) ... I realized that I was a passenger on a train and subject to forces (Wall Street) that were irrational.

I asked Kirk in my office, I said, "Look, this is not a question of noncompete. You can't have a noncompete. But you're financing me."

He said, "You're overdue, go for it, and I know where you're going (the Desert Inn). Don't pay too much. I want you as a neighbor."

Jon Ralston: How long did this whole thing take?

Wynn: An hour and a half ... We ate coconut sorbet. We talked about it, and I told him what the company was about, what its cash flows were, what it's making. He said, "We're disadvantaged, all we got is analysts' reports, and they're all over the place, they're inaccurate." I said, "Here's the numbers."

He said: "Will your guys show it to my guys tomorrow?"

I said: "Let's do it at 10 o'clock in the morning."

We made a deal, Kirk and I, that I would give him a number and he was the only guy I was ever going to give the number to. I wasn't interested in merging or doing anything like that. I didn't want anyone else's stock, I wanted cash. I said, "Look, if the stockholders can get a first-class price for this that's fair, I'll go for it. I want to start over again."

And I said, "Can you handle this?"

And he said: "Yes."

Ralston: He knew you were going to compete with him?

Wynn: I brought it up to him. We faced each other. He put his hand on my shoulder and said, "You're overdue."

Wynn told Kerkorian he had two conditions:

Wynn: The first condition is no counteroffer, it's either yes or no, up or down, I'll give you a number. If you counter, we'll never talk about it anymore, ever again, about this company.

The second condition is that (if there's no deal) we issue a joint press release, say we've met and discussed at great length the possibility of merging the two companies. We didn't see it working, we'll continue independently, permanently, continue as neighbors, working on industry problems."

He stuck his hand out and said, "You got my hand on it."

And then I said: "$21." (As in $21 a share, up from the $17 offer the Mirage Resorts board had rejected the previous day).

Ralston: Did he agree right away?

Wynn: He said, "That's, uh...."

I said, "A billion two more than you offered." ($6.7 billion, up from the $5.5 billion rejected offer.)

Wynn later said the "moment of truth" in that 90-minute meeting was when he realized Kerkorian would put in his own money to make up the difference between the two offers, if necessary. The next day, executives from the two companies met to discuss details. One day later, March 3, the deal was consummated; it was made public March 6.

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