GGRAsia – Melco Resorts to pay US$1.2bln for 20pct stake in Crown

Melco Resorts to pay US$1.2bln for 20pct stake in Crown

May 30, 2019 Newsdesk Latest News, Macau, Top of the deck, World

Asian casino developer and operator Melco Resorts and Entertainment Limited says it will pay an aggregate of nearly AUD1.76 billion (US$1.22 billion) to acquire 135.35 million shares of Australian gaming operator Crown Resorts Ltd. The deal represents 19.99-percent stake in Crown Resorts, according to a Thursday press release.

The acquisition will be done via a unit of Melco Resorts, which will pay AUD13.00 per Crown Resorts share to CPH Crown Holdings Pty Ltd. The latter company – controlled by Australian businessman James Packer – has currently a stake of approximately 47 percent in Crown Resorts.

It was announced in March last year Mr Packer was resigning from the casino operator’s board “for personal reasons”.

Crown Resorts runs a gaming resort in Melbourne, Victoria (pictured), one in Perth, Western Australia, and is developing a third at Barangaroo in Sydney, New South Wales. Crown Resorts also owns and operates Crown London Aspinalls, in the United Kingdom’s capital.

“The transaction will close in two equal tranches on June 6, 2019 and on or prior to September 30, 2019,” said the Melco Resorts statement. Following approval from Australian authorities, Melco Resorts said it intends to pursue board representation on Crown Resorts’ board of directors “commensurate with its ownership position”.

Melco Resorts said additionally that – subject to obtaining requisite regulatory approvals – it would be open to “the opportunity to increase its ownership in Crown”.

Commenting on the deal, Melco Resorts chairman and chief executive Lawrence Ho Yau Lung said in a prepared statement: “I view Melco’s investment in Crown as an incredible opportunity to purchase a strategic stake in what I believe to be Australia’s premier provider of true integrated resort experiences.”

Nasdaq-listed Melco Resorts was originally established in 2004 as a joint venture between Hong Kong-listed Melco International Development Ltd – a company controlled by Mr Ho – and a firm that eventually became Crown Resorts.

The combined venture was involved in developing several Macau casino resorts, including Crown Macau in Taipa – now known as Altira Macau, and which opened in 2007 – and City of Dreams Macau, on Cotai, which launched in 2009.

At the start of May 2016, Crown Resorts – alongside Melco International – each held a stake of 34.3 percent in the joint venture. But in early May 2016, Crown Resorts said it was cutting its holding in the firm to 27.4 percent. Further sell downs by Crown Resorts occurred in the space of several months, with the Australian company selling its remaining stake in Melco Resorts in May 2017.

Currently, Melco Resorts operates casino properties in Macau and in the Philippines, and has declared itself a contender for a casino licence in Japan.

Crown Resorts – after an incident in 2016 that led to the arrest of several of its employees in mainland China – had scaled down its international presence.

While the transaction announced on Thursday does not require regulatory approval, according to the release, Melco Resorts said the firm, Mr Ho and other select Melco Resorts executives would voluntarily submit applications to the gaming regulatory authorities in each of Victoria, Western Australia, New South Wales and any other relevant jurisdictions.

Mr Ho was quoted as saying in Thursday’s release: “I personally know the management at Crown and look forward to working with them to further enhance both Crown’s performance and development in Australia and the appeal of Crown’s properties to international patrons.”

In April, U.S.-based casino operator Wynn Resorts Ltd said it had ended talks on a potential deal to acquire Crown Resorts. That followed what the company termed “premature disclosure of preliminary discussions” regarding a potential deal.

Crown Resorts had confirmed earlier that it had been approached by Wynn Resorts regarding a potential AUD10-billion (US$7.1-billion) takeover.