Expressing interest
Hard Rock is reportedly eyeing a takeover of the embattled Australian casino company Star Entertainment. The latter confirmed on Monday that while non-substantive discussions were had about a possible deal, it has not received a direct proposal from the Seminole Tribe of Florida-owned entity.
shares closed 20% higher following the news
Star shares closed 20% higher following the news and its market capitalization reached AU$1.6bn (US$1.07bn). Its stock price has stagnated around historic lows in recent weeks as it awaits the outcome of a second inquiry into its suitability to operate casinos in New South Wales (NSW).
In a statement, Star Entertainment stated that it received interest from numerous parties about a potential takeover, among which is a group of investors that includes Hard Rock Hotels & Resorts (Pacific). Talking about the nature of these approaches, Star said that they are “confidential, unsolicited, preliminary and non-binding.” The company will inform shareholders of any significant developments.
A shift in focus
The Australian Financial Review reported that all Star-branded casinos would transition to the Hard Rock name if they reached a deal. The properties would shift focus toward non-gaming revenue streams like hotels, restaurants, and entertainment.
Scandal has followed Australia’s two biggest casino companies, Star Entertainment and Crown Resorts, in recent years. A comprehensive list of issues led to the initial inquiries in NSW and Queensland concluding that Star Entertainment wasn’t suitable to continue operating its casinos. It had to pay AU$100m (US$66.8m) fines to both regulators and raised AU$800m (US$535m) in 2023 to stay afloat.
Ongoing issues
A government-appointed special manager has overseen operations in NSW since the initial probe. The lack of progress in fixing issues within the company led to the commencement of the second inquiry in April. Some recent causes for concern include a negative culture within the company’s management team, the falsification of slot machine player welfare checks, and the failure to detect an ATM fault that led to patrons getting AU$3.2m (US$2.1m) in free money.
awaits the conclusion of the NSW inquiry
While Star Entertainment was initially given 12 months to show that it’s making sufficient improvements at its properties in Queensland, the state government outlined last week that it was pushing the deadline back to December as it awaits the conclusion of the NSW inquiry.