The land-based casino consolidation wave has just washed over the Australian coast to see two of the industry’s big players rekindle their previous bromance
In a statement from earlier today, Melco Resorts & Entertainment announced that it has entered a purchase agreement to buy 135.35 million shares of Crown Resorts from CPH Crown Holdings Pty Limited (CPH) for a price of A$13 per share, or a total of approximately A$1.8 billion. The purchased shares represent a 19.99% ownership interest in the Australian casino operator.
Melco added that the transaction will close after two equal tranches, the first of which will be carried out on June 6, while the second is set for or prior to September 30.
While Melco does not need regulatory approval to complete the transaction, the company said that its Chairman and CEO, Lawrence Ho, and other Melco executives will submit applications for approval from the regulators of Victoria, Western Australia, New South Wales, and any other relevant territories. Once it clears the approvals, the Macau casino giant will also pursue board representation. The company further pointed out that it “welcomes the opportunity to increase its ownership in Crown.”
Joining Forces Again
Melco and Crown Resorts are no strangers to one another. Back in 2004, the two companies formed a 50/50 joint venture to develop and operate together integrated resorts in China and the Asia-Pacific region. The Melco Crown JV developed luxury hotel and casino resorts in Macau and the Philippines.
In 2017, Crown Resorts decided to exit Macau and part ways with Melco, selling its stake in their joint venture to its partner. The move came after and was prompted by the arrest of 18 members of the Australian company’s staff in Mainland China in the fall of 2016. The operator’s head of VIP operations was among those detained by Chinese police.
The arrests resulted in Crown Resorts’ Australian operations losing precious Chinese high roller clientele. That in turn resulted in a 45% decrease in VIP turnover. Crown Resorts said back then that it had decided to exit Macau and focus its attention on its existing Australian properties as well as on the planned development of its Crown Sydney integrated resort in order to mend its profitability.
Melco now purchasing Crown Resorts stock will enable the Macau casino and hospitality giant to extend its footprint to Australia. Commenting on today’s announcement, Mr. Ho said that their investment is “an incredible opportunity to purchase a strategic stake in what I believe to be Australia’s premier provider of true integrated resort experiences.”
The casino boss further elaborated that Crown Resorts’ existing properties are “world class entertainment destinations” and that Crown Sydney, “much like Melco’s Morpheus property, will create an architectural icon for the city, the country and the world.”
Construction of the A$2.2 billion Crown Sydney is well under way. The property will feature a 71-story tower, overlooking the Sydney Harbor and the iconic Opera House, and, among other amenities, will include Sydney’s second Las Vegas-style casino, thus putting an end to the long-standing monopoly of The Star Sydney, which is owned by Crown Resorts’ archnemesis – The Star Entertainment Group.
Wynn Resorts’ Bid
News about Melco purchasing a stake in Crown Resorts and its interest in growing that stake in future arrived shortly after another casino powerhouse expressed interest in the Australian operator.
It emerged last month that Las Vegas operator Wynn Resorts had reached out to Crown Resorts with a $7.1 billion offer to buy the company. Wynn Resorts quickly abandoned takeover talks after information about those leaked to the press. The company said in a statement that “following the premature disclosure of preliminary discussions, Wynn Resorts has terminated all discussions with Crown Resorts concerning any transaction.”
The Las Vegas operator now appears to be entirely focused on the upcoming opening of its newest integrated resort – the $2.6 billion Encore Boston Harbor. The property is slated for June 23 debut in the City of Everett near Boston, Massachusetts.
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