Hard Rock Hotel Mulls Bid for Star Entertainment, AFR Reports

Ora Sawyers

(Bloomberg) — Troubled Australian casino operator Star Entertainment Group said suitors have approached the company, including a Hard Rock Hotels & Resorts consortium, a potential lifeline for the business as its future hangs in the balance. Shares in Star soared.

Star “has received inbound interest from a number of external parties regarding potential transactions,” the Sydney-based company said early Monday. “At this stage, none of the approaches has resulted in substantive discussions.”

Shortly afterwards, Star said in a second statement that one of the possible buyers was a consortium of investors that included Hard Rock Hotels & Resorts (Pacific).

Star’s disclosures followed a report in the Australian Financial Review 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 newspaper, the proposal included injecting fresh capital into Star, re-branding the company and separating its properties from the casinos.

Star’s future in Sydney, home to the company’s flagship casino, is uncertain as a fresh inquiry determines whether it has made enough progress into addressing wrongdoing to keep its gaming license. The casino has been run by a government-appointed manager since a damning report in 2022 found it had lax anti-money laundering controls, allowed patrons to flout China’s capital controls and encouraged problem gamblers. 

Star’s chief executive officer and chairman resigned this year and before today, the company’s shares had tumbled 60% in the past 12 months. The shares jumped as much as 22% after Star’s statements on Monday. The stock was trading up 17% at 11:09 a.m., giving Star a market value of A$1.5 billion ($1 billion).

Read More: Star Chair and Ex-CEO Plotted to Oust Regulator, Hearing Told

It’s not clear what any successful buyer of Star would end up owning. Star told the Sydney inquiry last week that it didn’t consider itself fit to operate the city casino in its own right. It argued that the current arrangement that allows Star to run the casino with an external manager should be extended.

The Sydney inquiry’s final report is due on July 31. Meanwhile, Star’s two other casinos  — in Gold Coast and Brisbane in the state of Queensland  —- are also operating under government caretakers.

Hard Rock is working with Australian and US investors on its Star proposal and is being advised by KPMG, according to the AFR report. The bid aims to turn the Australian company into a business less dependent on casino income and more focused on entertainment, restaurants and hotels, the report said. Hard Rock didn’t respond to questions, the Australian Financial Review reported.

Star’s main casino rival in Australia, Crown Resorts Ltd., went through similar suitability inquiries in recent years in New South Wales, Victoria and Western Australia that exposed a littany of wrongdoing. 

Crown, now owned by Blackstone Inc., in March this year was allowed to keep the license to operate its flagship Melbourne casino after the regulator judged it had undertaken sufficient governance and anti-money laundering reforms under its government monitor.

(Updates with second Star statement and stock jump in the first paragraph.)

©2024 Bloomberg L.P.

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