Melco Resorts stops Crown share acquisition

Melco Resorts & Entertainment Limited announced that it has decided to stop the second half of its purchase deal for a 20 per cent share in Crown Resorts Limited, citing the impact of the coronavirus outbreak as the main reason for its decision.

Melco was in the process of acquiring 135.35 million shares in Crown Resorts from CPH Holdings – the family investment company of James Packer – for US$1.22 billion (MOP9.8 billion), in two tranches, with the first 9.99 per cent company share purchase already closed on June 6, 2019.

The second 9.99 tranche purchase was set to close on or prior to September 30, 2019, however, it had been previously delayed by the group until Australia gaming authorities concluded their inquiry into the deal, with a total halt on the deal now announced.

‘Due to the impact of the coronavirus epidemic, including the severe drop in tourism in Asia to integrated resort facilities in the region, and the recent decision by the government of the [Macau SAR] to close all casinos in Macau, Melco Resorts has taken the decision to reassess all non-core investments to be made in 2020,’ the announcement explained.

A 15-day suspension of all casino operations was imposed on February 5 by Macau authorities as a measure to contain the spread of the novel coronavirus.

The decision was announced on February 6, the same day as the Australian Financial Review newspaper reported that Melco had filed a legal challenge against the NSW Independent Liquor and Gaming Authority, in which it argued that the regulator was exceeding its authority by launching an inquiry into its acquisition.

The gaming group headed by Lawrence Ho also expressed in the filing that its core operations businesses where it is the managing and majority shareholder, including operations in Macau, the Philippines, and Cyprus and its efforts to obtain a license to operate a Melco Resorts-owned integrated resort in Japan.

‘Melco Resorts intends to continue its operations in these jurisdictions and carry out key investments currently earmarked for Macau, Manila, Cyprus, and Japan, including the construction of Studio City phase 2 and City of Dreams Mediterranean,’ the operator noted.

‘For the above reasons, Melco Resorts decided not to pursue its planned investment in Australia for the Second Tranche Shares. While Melco Resorts believes Crown Resorts has world-class assets that are complementary to its global business, it is Melco Resorts’ belief that, at this time, its capital needs to be deployed on its core assets’