HONG KONG/BENGALURU (Reuters) - Melco Resorts & Entertainment will buy a 20% stake in Australia’s Crown Resorts from casino mogul James Packer for A$1.76 billion ($1.22 billion), the U.S. company said, months after Wynn Resorts withdrew an offer to buy Crown.
The deal presents a great opportunity for Melco, Chief Executive Lawrence Ho told Reuters, as the operator of casinos across Asia, including in Macau and the Philippines, eyes further expansion.
“It is certainly our intention to continue, if the opportunity arises, to increase our stake in Crown,” Ho said.
Crown’s proposed deal with Wynn, the world’s No. 2 casino operator, fell through in early April after details were leaked to the media, denying Packer a huge payout as he continues his withdrawal from business life because of mental health issues.
Packer’s investment company, CPH Crown Holdings, owns 47% of Crown Resorts.
Melco and Crown have worked together previously. In 2006 they gained a subconcession from the Macau government to operate casinos and remained in partnership until 2017, when Packer decided to sell his overseas assets to focus on his domestic market in Australia.
Ho said his relationship with Packer remains very strong and he is excited to be working with executives at Crown that he already knows well.
Packer, meanwhile, said his remaining Crown shareholding represents his single largest investment and that the sale allows him to diversify his investment portfolio.
Melco’s move comes as it vies for a casino licence in Japan. The company, which has been active in developing its entertainment and other non-gaming attractions, had a similar “DNA” to Crown, Ho said, adding that they had a shared track record and emphasis on quality.
Ho said Melco executives would submit applications to the gaming regulatory authorities in relevant jurisdictions, including Victoria, Western Australia and New South Wales, after which he would welcome the opportunity to increase Melco’s stake in Crown.
Melco will buy 135.35 million Crown Resorts shares at A$13 per share, with the transaction closing in two equal tranches on June 6 and on or before Sept. 30, Melco said.
The offer represents a marginal premium of 0.6% to Crown’s closing price of A$12.92 on Thursday and Melco intends to seek board representation in the Australian casino operator.
Melco shares were down 1% at $20.70 in early trading.
($1 = 1.4436 Australian dollars)
Reporting by Nikhil Kurian Nainan in Bengaluru and Farah Master in Hong Kong; Editing by James Emmanuel, Sweta Singh and David Goodman