Star Entertainment revealed on Monday that a consortium led by Hard Rock Hotels & Casinos, based in Florida, is contemplating a bid for the financially troubled Australian company, causing its shares to soar by 20%.
The potential acquisition by Hard Rock could provide a critical financial boost to Star, which has been struggling with a regulatory investigation into its main casino in Sydney and the departure of several key executives.
With a market valuation of A$1.29 billion ($863.66 million) at Monday’s close, Star disclosed that it had been approached by a group of investors that includes Hard Rock Hotels & Resorts (Pacific). The company noted that Hard Rock Hotels is recognized as a local partner of Hard Rock.
Earlier in the day, Star had announced it had received “inbound interest from a number of external parties,” but none had progressed to “substantive discussions” at that point. Star’s disclosure was in response to an Australian Financial Review report suggesting that a consortium led by Hard Rock was evaluating a takeover of Star.
According to the report, the Hard Rock-led bid aims to shift Star’s primary revenue sources to restaurants, hotels, and entertainment, reducing its reliance on casino operations. Hard Rock did not immediately comment when contacted by Reuters. However, after the news was released, Inside Asian Gaming reached out to Hard Rock and the company stated that, contrary to the Australian Financial Review’s report, “Hard Rock is not a member of any group looking to acquire Star, nor is it leading any such initiative.”
Share Price Surges
Ben Williamson, co-founder and co-CEO of investor marketing platform InvestorHub, commented on the situation, stating, “While the market has reacted positively to the speculation about an acquisition by Hard Rock, Star Entertainment Group’s 73,000 shareholders will have a large say in the outcome of this. Star will need to engage its entire base to ensure any takeover is successful.”
On Monday, Star’s shares closed 20% higher at A$0.54, marking their best performance since early March and making them the top performer on the Australian exchange, which overall rose by 0.6%.
Australian casino operators have faced intense regulatory scrutiny in recent years. Crown Resorts, owned by Blackstone (BX.N), has also been subjected to inquiries that unveiled various malpractices.
Star is currently undergoing a regulatory review to determine if it can retain its gaming license for the Sydney casino, casting uncertainty over its future. The final report from this inquiry is expected by July 31.
Additionally, Star is in the process of searching for a new chairman and CEO following the resignation of both roles earlier this year.
