Titan out to raise stakes
THE Asian gambling titan buying a major stake in Crown Resorts from billionaire James Packer says it is keen to increase its holdings in the Australian casino heavyweight.
Melco Resorts and Entertainment, controlled by Hong Kong-based billionaire Lawrence Ho, has also told investors it intends to be represented on the board of Melbourne-based Crown.
Shares in Crown slumped yesterday as investors reacted to the move by Mr Packer to sell off almost half his stake in the casino operator for $1.76 billion.
Mr Packer has struck a deal to sell 19.99 per cent of his 46 per cent stake in Crown for $13 a share to Melco.
It comes less than two months after Las Vegas operator Wynn Resorts dropped its bid to buy Crown outright for a more juicy $14.75 a share.
Melco said it would buy the stake in two tranches, expected to happen on June 6 and September 30.
It said it did not need regulatory approval to take the stake but would submit applications to gaming regulatory authorities in Victoria, NSW and Western Australia.
The Victorian Commission for Gambling and Liquor Regulation told Business Daily the transaction would require its approval, in line with the state’s Casino Control Act.
That Act requires the state government to sign off on any change of ownership at Crown in order for it to maintain its licence to operate its flagship Melbourne facility.
The regulator said it would probe Melco and “any associated individuals”.
Melco said the deal represented “an incredible opportunity for the group to acquire a strategic stake in Australia’s premier provider of true integrated resort experiences”.
Citi analyst Anil Daswani tipped Melco would eventually buy more of Crown.
“We would not be surprised to see Melco increasing its interests in the future if it can get seats and/or control of the board,” the Hong Kongbased analyst said in a research report for clients.
Melco is buying slightly less than a 20 per cent stake in Crown, meaning it will avoid takeover rules that come into play at that level.
UBS analyst Matt Ryan said further interest in Crown from Melco or others could not be ruled out and this was likely to drive the share price in the near term.
Melco operates casinos in Chinese gaming mecca Macau and the Philippines.
WE WOULD NOT BE SURPRISED TO SEE MELCO INCREASING ITS INTERESTS IN THE FUTURE IF IT CAN GET SEATS AND/OR CONTROL OF THE BOARD CITI ANALYST ANIL DASWANI