56 Business The EconomistFebruary 3rd 2018
2 paid a $7.5m settlement to a manicurist
who told others that Mr Wynn forced her
to have sex at his Wynn Las Vegas casino in
2005, and whose supervisor had reported
the incident to human resources. The
newspaper reported allegations that Mr
Wynn exposed himselfto massage thera-
pists and other women and made unwant-
ed advances. According to the newspaper,
women would hide in lavatories when Mr
Wynn was said to be on his way to a salon
where they worked. Mr Wynn, in a written
statement, said, “The idea that I ever as-
saulted any woman ispreposterous.” He
also accused his ex-wife, Elaine Wynn, of
instigating the allegations as part of a long-
running legal battle, which she has denied.
Mr Wynn is the first boss of a big public
company to face sexual misconduct accu-
sations in the #MeToo era. As with Harvey
Weinstein and The Weinstein Company,
Mr Wynn’s control over Wynn Resorts is
viewed as near-absolute. His signature is
the company’s logo. Depending on the out-
come of the firm’s inquiry, its board and se-
nior executives may come under intense
scrutiny from both investors and regula-
tors over whether they failed to hold the
boss to account.
His empire-building may come to a halt
before then. Regulators in three jurisdic-
tions are considering the impact on the
company’s fitness to hold casino licences.
Mr Wynn has a new project under con-
struction in Las Vegas, is planning an ex-
pansion in Macau and is building a casino
in Massachusetts. The $2.4bn Wynn Bos-
ton Harbour, scheduled to open next year,
is projected to be hugely profitable since it
would have an effective local monopoly.
But the greatest financial exposure for
Wynn Resorts is in Macau, an autonomous
region of China, where its two casinos pro-
vided 75% of the company’s $1.7bn of earn-
ings before interest, taxes, depreciation
and amortisation last year. The company
holds a concession from the Macau gov-
ernment that is up for renewal in 2022.
If Mr Wynn steps aside, the firm would
become vulnerable. Competitors are siz-
ing up its assets. “Everybody’s moving
quickly,” says an executive close to one of
Wynn Resorts’ rivals. Suitors include Cae-
sars Entertainment; Blackstone, a private-
equity group with a casino in Las Vegas;
and MGMResorts International, which al-
ready owns the Mirage and Bellagio, hav-
ing swallowed up Mr Wynn’s previous ca-
sino company, Mirage Resorts, in a hostile
takeover 18 years ago. The prospect of yet
another forced sale is a remarkable turna-
round in fortunes. Analysts from JPMor-
gan Chase, in a note following the news of
the allegations, said that Wynn Resorts has
long had “the single largest individual CEO
dependency” of any gaming company the
investment bankcovers, and that investors
have rewarded the firm with a premium.
But a big bet on one boss carries risks. 7The beverage businessTall drink of soda
E
UROPE is home to some extraordinary
wealth creators who often try to hide
their success. Ingvar Kamprad, a Swedish
farmer’s son, constructed IKEA, a seller of
flat-pack furniture that became a global
giant with annual revenues of €38bn
($47bn). He died at the age of 91 on Janu-
ary 27th, after a famously frugal life.
Amancio Ortega, the Spanish son of a
railway worker, founded Inditex, a fast-
fashion giant, and shuns any media
attention. Then there is the reclusive
Reimann family of Germany, members
of which reportedly take a vow at the age
of18 not to talk publicly about their busi-
ness, JABHolding, a Luxembourg-based
investment group.
Ye tJAB’s habitof gulping down big,
famous firms at a frenetic pace is making
it hard for it to stay in the shadows. On
January 29th it said it will pay $18.7bn in
cash (plussome shares) to buy Dr Pepper
Snapple, the world’s fifth-biggest maker
of soft drinks, which has roots dating
back to 1885. It will be combined with
Keurig Green Mountain, an American
coffee producer thatJAB bought in 2016
for $14bn. In the past few years most of its
targets have been in the coffee business,
so a maker of ice-cold beverages is a
departure. As it has done with Keurig, JAB
plans to squeeze costs and pay down
hefty debt, while winning market share.
JAB’s focus on consumer-goods firms
in America, especially coffee producers,
could suggest it hopes to rival giants such
as Nestlé and Starbucks. In the past cou-
ple of years it also paid $1.35bn for Krispy
Kreme, a maker of doughnuts and coffee,
and $7.5bn for Panera Bread, a bakerychain with over 2,000 outlets. That deal
was touted as one of the biggestin the
global restaurantindustry. An earlier
plan to emulate Europe’s luxury groups,
such as France’sLVM H, in building col-
lections of brands has been dropped. Last
yearJABoffloaded Jimmy Choo, a maker
of shoes, for $1.2bn. It hopes also to sell
Bally, another luxury firm.
The change of focus looks astute.
Consumers, readier to pay more for
experiences rather than just products,
show an ever-growing fondness for
pricey shots of strong coffee, especially
those squirted via plasticpods. A survey
last year found that 41% of American
adults drink “speciality” coffee (industry
jargon for pricier stuff) daily, up from just
9% in 1999. Many of these are quaffed at
home. Next, firms want to encourage
consumers to down cold drinks—perhaps
Dr Pepper or Snapple for starters—using
similar pod systems.
Being sure of whatJABplans for the
future is tricky. It is managed by profes-
sionals, but decisions on what to buy are
taken by the Reimann family. The legal
descendants of Ludwig Reimann, a
chemist and industrialist, their wealth
has variously been valued at €16bn-33bn.
AsJABgrows, analysts increasingly liken
it to 3G, a feared Brazilian investment
group that snaps up makers of consumer
products like KraftHeinz before slashing
costs and jacking up returns. JABclaims
to have a different philosophy, emphasis-
ing the long term. Given its secretive
owners and previous turns of strategy,
however, it is hard to know whether to
take that notion seriously.The $18.7bn takeover of Dr Pepper Snapple highlights a secretive family’s plans