Star Entertainment Group Ltd. share price jumped after it was approached by suitors for purchase which included Hard Rock Hotels & Resorts consortium. The approaches for acquisition which includes Hard Rock has triggered expectations of a bidding war for the troubled Australian casino operator.
Star “has received inbound interest from a number of external parties regarding potential transactions,” as reported by the Sydney-based company early Monday. Though, at this stage, none of the approaches has resulted in substantive discussions.”
Star acquisition offers
Shortly after the news of offers, Star said one of the possible buyers was a group of investors that included Hard Rock Hotels & Resorts.
Star share price soared 23% after the disclosures that Hard Rock may buy, lifting the company’s market value to A$1.6 billion ($1.1 billion). While a new owner might offer a potential financial lifeline, Star’s future remains far from certain. A regulatory inquiry is currently assessing whether the business has sufficiently addressed corporate wrongdoing to keep its gaming license at its flagship Sydney casino.
Star money laundering issue
The Sydney casino has been run by a government-appointed manager since a damning report in 2022. The report found it had lax anti-money laundering controls, allowed patrons to flout China’s capital controls and encouraged problem gamblers.
At the same time, Star is searching for new leadership after its chief executive officer and chairman resigned this year. Before today, the company’s shares had tumbled 60% in the past 12 months. Making even the crisis-ridden company a cut-price takeover target for global buyers.
Star acquisition offer by Hard Rock
Star’s disclosures on Monday followed a report that a group led by Hard Rock Hotel & Casino, operator of The Mirage in Las Vegas and other casino resorts in North America, had recently submitted an offer to Star. According to the report, the proposal included injecting fresh capital into Star, re-branding the company and separating its properties from the casinos.
It’s not clear what any successful buyer of Star would end up owning. The Sydney inquiry’s final report is due July 31. Star’s two more casinos in the Gold Coast and Brisbane, in Queensland are also operating under government caretakers.
Hard Rock bid
Hard Rock owns over a dozen casinos including in Hollywood, Cincinnati and Atlantic City. It has recently announced it would close The Mirage Hotel & Casino in Las Vegas for renovations in July.
It is working with Australian and U.S. investors on its Star proposal and is being advised by KPMG. The bid aims to turn the company into a business less dependent on casino income and more focused on entertainment, restaurants and hotels. There was no respond from Hard Rock as per report.
“If successful, the proposal would transform Star’s properties into entertainment destinations less reliant on casino revenue and focused on live music, food and beverages, and hotels,” the report added.
Star’s competition Crown Resorts
Star’s main casino rival in Australia, Crown Resorts Ltd., went through similar suitability inquiries in recent years. The inquiries were in New South Wales, Victoria and Western Australia that exposed a litany of wrongdoing.
Crown, now owned by Blackstone Inc., in March was allowed to keep the license to operate its flagship Melbourne casino. This was after the regulator judged it had undertaken sufficient governance and anti-money laundering reforms under its government monitor.
Star stock price
Share price of Star Entertainment surged as much as 22.2% to top the benchmark ASX 200 index. The benchmark ASX 200 index was up 0.5%, as of 0141 GMT.
