Crown Resorts terminates joint venture with Melco

  • 10th May 2017 | Macau, CN
  • James Packer’s Crown Resorts has sold its entire holding in Asian gaming company Melco Crown Entertainment, ending a 12-year partnership with Chinese tycoon Lawrence Ho. For this sale operation, Crown Resorts will receive about US$987m from the transaction, according to an exchange filing yesterday. The company said it will use the net proceeds to reduce Crown’s net debt.

    melco-cod300Hong Kong billionaire Lawrence Ho, who controls the casino and resort developer, kicked off a share sale to fund the concurrent repurchase, the company said Monday in a filing. While calling Packer a “great friend and partner,” Ho said he’s taking the solo route in a global expansion, with Japan as the next target. Packer, on the other hand, is retreating back to Australia.

    “Despite our positive history with Crown, I made the strategic decision to terminate the joint venture arrangement and allow Melco to pursue Japan alone,” stated Lawrence Ho, Melco Resort & Entertainment chairman and CEO. “This highlights our confidence in and commitment to, identifying and evaluating new markets which will drive long-term shareholder value.”

    Shares of Crown Resorts gained as much as 1.5pc yesterday in Sydney. Shares of Melco fell 3.9pc, the most since February, on Monday in New York where it’s listed.

    Crown Resorts began selling down its stake in Melco Crown last year, in the aftermath of a clampdown by Chinese authorities in October, when more than a dozen Crown staff were detained for alleged gambling crimes. It’s now mostly focused on its Australian resorts and development projects in the country.

    Melco said Monday that it offered to sell 27.8 million American depositary shares and almost 82 million ordinary shares along with the buyback. Terms showed separately that 15.8 million ADS were offered at $21.25 to $21.45 each via Deutsche Bank AG, UBS Group AG and Morgan Stanley.

    Melco Resorts’ majority shareholder, Melco International Development Ltd., will repurchase its joint venture partner Crown Resorts’ remaining stake in the company as part of the deal, according to a statement Monday. Upon the completion of the share repurchase on May 15, Crown Resort will cease to be a shareholder in the company and Crown’s sole remaining nominee director will resign as non-executive director.

    In the long-run, the partnership’s end is a net positive for Melco that puts it in the driver’s seat, said Union Gaming Group LLC analyst Grant Govertsen. |