Casino firm Melco Resorts and Entertainment has decided to abandon its plans to boost its stake in the Australian giant Crown Resorts due to the dangerous coronavirus spreading.
Earlier today, the Hong Kong-listed gambling company revealed that it is withdrawing from the AU$880-million agreement under which it would have raised its stake in Crown Resorts to almost 20%. In a statement from Lawrence Ho-controlled Melco, it was announced that the company would quit its pursuit of the initially planned investment in Australia for the second tranche of the takeover deal in the Australian gambling giant because at the time it finds it more important to stay focused on its core assets.
Over the last few weeks, the tourism and gambling sectors have suffered a massive blow by travel bans and quarantines because of the deadly coronavirus outbreak. The coronavirus, which has already killed over 600 people and infected thousands more, have been the reason why earlier this week Macau authorities decided to close the casino venues in the world’s biggest gambling hub for a fortnight.
As revealed by several bankers for the Financial Times, there have been concerns that the spreading coronavirus would have a negative effect on merger-and-acquisition activity that involves China-based companies not only in gambling but in various sectors.
Melco Has Already Acquired a 10% Stake in Crown Resorts in 2019
The deal between the Australian gambling giant and Melco Resorts & Entertainment was officially announced in May 2019. At the time, it was revealed that Melco is set to purchase a 19.99% stake in Crown Resorts. In the first tranche of the deal, Melco acquired an initial 10% in the Australian gambling operator and a second part of the deal was to follow, but Australian authorities started the probe into the deal and held up the transfer of the remaining shares.
As Casino Guardian has already reported, the gambling and liquor regulatory body of New South Wales (NSW) started a probe into the suitability of Melco Resorts and Entertainment for Crown’s partner. The investigation is also aimed at making sure that the share stake transfer has not violated the licence conditions of the Australian gambling company, and more specifically, a clause that bans the involvement of Mr Lawrence Ho’s father and people and entities associated with him in Crown’s new Sydney casino project.
The clause was implemented as part of the Australian casino company’s licence conditions to protect its new Sydney casino from any relation to the elder Mr Ho because of his alleged links with organised crime groups. The public hearings are set to start as part of the inquiry later in February, with Crown Resorts also facing an investigation into allegations of participation in money laundering, gambling laws breach and partnership with junket operators linked to criminal activity.
- Author
Olivia Cole
