It’s all over between Melco Resorts & Entertainment and Crown Resorts.
Starting this week, the Nasdaq-listed Asian casino operator announced a public offering of 27.8 million American depositary shares and repurchase from its Australian counterpart and longtime partner.
According to Melco’s official report, when the transaction is complete on May 15, Crown Resorts will hold no shares in Melco; the firms’ planned joint venture in Japan will be officially over; and Crown’s Robert Rankin will resign as a non-executive director of Melco.
Lawrence Ho, chairman and CEO of Melco Resorts, announced the news and hailed his longstanding partnership with Crown Resorts head and fellow billionaire James Packer. “It is with great pride that I look back over the past decade and recognize all that we have achieved in partnership with Crown Resorts at Melco,” Ho said. “This transaction brings to conclusion the world’s most successful global gaming partnership, highlighting our ability to work with partners in both good times and more challenging operating environments.
“I would like to personally offer my sincere thanks to Mr. James Packer and Crown Resorts for being a great friend and partner for the past decade,” Ho said.
Looking forward, he added, his company will make a bid on the emerging casino market in Japan without its planned joint venture partner. “I made the strategic decision to terminate the arrangement and allow Melco to pursue Japan alone,” Ho said. “This highlights our confidence in and commitment to identifying and evaluating new markets which will drive long term shareholder value while contributing to the development of tourism and delivering other economic benefits for our host cities where we operate. Our experience gives us strong confidence to enter new markets by working in concert with local partners.”
According to GGRAsia, Crown will use the proceeds from its sale of Melco to reduce the company’s debt. In a filing to the Australian Securities Exchange, the firm stated, “Crown Resorts is expected to generate net proceeds of approximately US$987 million or AUD1.34 billion (equivalent to US$5.97 per Melco Resorts ordinary share and US$17.91 per Melco Resorts American depository share).”
Melco Resorts was originally established in 2004 as a joint venture between Hong Kong-listed Melco International Development Ltd and a firm that eventually became Crown Resorts. The venture’s name changed from its former moniker Melco Crown Entertainment Ltd last April, following a series of sell downs by Crown Resorts.
Shares of Crown Resorts gained as much as 1.5 percent on the news last week. Shares of Melco fell 3.9 percent, the biggest drop since February, reported Bloomberg News. Despite the short-term dip, the end of the partnership is a good move for Melco, said Union Gaming Group LLC analyst Grant Govertsen.
“The total elimination of Crown—and therefore the dissolving of the JV—is a positive for Melco,” Govertsen said. “While the Melco side of the JV already had majority control, this transaction cements the control and allows Melco to solely determine strategies going forward.”
