Melco Resorts & Entertainment has announced the acquisition of a 19.99% stake in its former Macau partner and Australian casino operator Crown Resorts Limited.
Melco revealed late Thursday that it has executed a definitive purchase agreement through which a subsidiary will acquire 135.35 million shares of Crown Resorts Limited from CPH Crown Holdings Pty Limited at AU$13.00 per share, representing a total consideration of AU$1.76 billion (HK$9.58 billion).
The Macau IR operator said it would also welcome any opportunity “to increase its ownership in Crown” once regulatory approvals are obtained in Victoria, Western Australia and New South Wales – the three Australian states in which Crown has a presence. Melco gave no indication of how much more than its initial 19.99% stake it would like to acquire.
In a statement, Melco Chairman and CEO Lawrence Ho said he viewed 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.
“Crown’s Resorts in Perth and Melbourne are world class entertainment destinations and I believe that Crown Sydney, much like Melco’s Morpheus property, will create an architectural icon for the city, the country and the world.
“In addition, 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.”
CPH Crown Holdings Pty Limited is the private investment firm of Crown’s controlling shareholder, James Packer, who retains around 25% of Crown Resorts shares following the transaction. Packer released a statement of his own on Thursday in which he insisted he is still “vitally interested in Crown’s success as a world class resort and gaming business. I am thrilled Lawrence Ho and Melco have chosen to invest in Crown.”
He added, “My continuing shareholding represents my single largest investment. This sale allows me to continue my long term involvement with Crown and at the same time to better diversify my investment portfolio.”
Melco’s acquisition of Crown shares comes less than two months since US casino operator Wynn Resorts pulled out of takeover talks with Crown after news of ongoing negotiations was leaked.
It is also just over two years since Crown completed its exit from the Melco-Crown joint venture in Macau, having begun selling off its original 34.3% stake 12 months earlier. The split ended a 13-year alliance under which Melco-Crown developed City of Dreams, Studio City and Altira in Macau as well as City of Dreams Manila in the Philippines.
Melco revealed on Thursday night that it would pursue representation on Crown’s board of directors commensurate with its ownership position once the acquisition of shares is complete. The transaction will take place in two equal tranches with the first on 6 June 2019 and the second on or prior to 30 September 2019.