Melco Resorts Abandons Crown Stake Purchase
Melco Resorts has dropped its plans to buy an additional 10% stake in Crown Resorts. This decision comes due to the impact of the coronavirus outbreak. Melco will keep its current 10% stake in Crown as it reassesses its investments amid falling tourism in Asia. The announcement was made just before public hearings led by former New South Wales Supreme Court judge Patricia Bergin. These hearings will investigate Crown's operations and the proposed sale of shares to Melco.
Melco's original deal aimed to purchase nearly 20% of Crown from its largest shareholder, James Packer. This deal was planned in two phases. The first 10% was transferred in July 2019. However, the second part was paused in August 2019 while waiting for the inquiry into Crown's business practices. This inquiry began after allegations of money laundering and organized crime connections at Crown casinos, which the company denies.
According to S&P, Melco faces higher risks from the coronavirus than Crown does. Melco's casinos in Macau are currently closed due to government restrictions. In a statement, Melco noted the "severe drop in tourism" and the need to reassess all non-core investments for 2020. The company said, "Due to the impact of the coronavirus epidemic, Melco has taken the decision to reassess all non-core investments to be made in 2020."
The ongoing inquiry will also look into whether the proposed sale raises any issues about Lawrence Ho. He is linked to a banned company associated with organized crime. The inquiry is expected to explore the complex relationships within the Ho family’s casino operations in Macau.
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The decision to abandon the stake purchase may impact Crown Resorts' stock performance. This comes as the company faces ongoing regulatory scrutiny. Investors will closely watch the outcomes of the inquiry and any potential effects on Crown's operations and governance. Developments from the New South Wales inquiry are expected soon, with public hearings set to begin shortly.
Based on reporting by: theguardian.com