- »Ups and Downs Related to Crown-Melco Deal
Ups and Downs Related to Crown-Melco Deal
Just a few weeks ago, Melco Resorts & Entertainment made it known that it intended to buy a 20% stake in Crown Resorts from James Packer. The Crown-Melco deal price tag was A$1.76 billion.
Concerns subsequently abounded from Australia and beyond, though. Mostly relating to Melco CEO Lawrence Ho’s connections to his father, Stanley Ho. The latter has long been suspected of having connections to organised crime.
The concerns were strong enough to trigger a regulatory probe in New South Wales. Furthermore, concerns continue to mount as time passes.
Crown-Melco Deal Not-Yet-Finalised
Melco and Crown were both supportive of the deal in which Melco agreed to buy 135.35 million shares of Crown at A$13 per share. The massive $1.76 billion deal was seen as an opportunity for Packer to continue his efforts to step back from the daily business. At the same time, it allowed Ho to expand his gaming realm from Asia into Australia.
On June 6th, the initial part of the transaction closed. It whole deal should be finalised by September 30. The New South Wales regulatory investigation will likely be completed by then.
Ho’s long-term plans include Melco applying for gaming licenses in New South Wales, Victoria, and Western Australia with the eventual goal of increasing his stake in Crown.
Stock Price Fluctuations
Initially, the response from shareholders for the Crown-Melco deal did not mimic the excitement of Packer and Ho. Both saw stop prices drop upon the initial revelation of the deal.
Since then, Crown has not completely recovered. Instead, it has ridden a roller coaster that started at $12.885 on May 30 and dropped to $12.145 within a week. By June 17, the price was down to $11.72, close to its lowest point in the past year. As of June 27, the price had bounced back to $12.46.
Melco saw a similar initial drop, starting at $20.92 and dipping to $18.73 on June 3. That marked its lowest point in all of 2019. However, another deal in the City of Dreams Mediterranean sent prices back up. On June 27, they hit $21.88.
Melco Roller Coaster
The business dealings of Melco have been very up and down over the past several weeks.
On June 11, Melco took a hit when the Philippine Stock Exchange (PSE) de-listed the company. Despite Melco’s presence in the country and its operation of the City of Dreams Manila casino, the company failed to reach its minimum public holding threshold.
PSE warned Melco in May that the de-listing was on the table. The problem persisted, though. On June 11, 2019, the PSE registry delisted Melco. With that, Melco is unable to qualify for another listing on the PSE for five years.
Melco seemed to shrug that off without concern. It moved forward with a new deal on June 24 to acquire a 75% equity interest in ICR Cyprus. That entity holds a 30-year casino gaming license in Cyprus to operate one primary casino and two satellite casinos, with two more opening this year.
The City of Dreams Mediterranean integrated destination resort project is ICR Cyprus’ big project, though. Slated for a 2021 opening, it will be one of the largest City of Dreams in the world, as well as one of the biggest resorts in Europe.
The ICR board of directors’ special committee unanimously approved Melco’s acquisition of 55.5 million shares. That amount represents approximately US$375 million. The deal is expected to close no later than September 20, 2019.
Crown Deal Approved by Beijing
According to Inside Asian Gaming, Melco did receive approval from the Chinese and Macau governments before proposing to acquire 19.99% of Crown Resorts.
Ho noted that he was not required to obtain approval, since Melco is listed in the United States. Nevertheless, he felt the okay was important enough to mention He also said that Beijing and Macau were both supportive.
Meanwhile, the Australian investigation continues. No word has come from New South Wales yet as to its outcome. A decision is expected sometime in July or August, ahead of the projected closing date of the Crown share acquisition.