AUSTRALASIA 38
australia
Melco drops Crown stake purchase Hopes for a new partnership between Melco Resorts & Entertainment and Crown Resorts have been put on the back burner after the Macau operator said it was abandoning plans to buy a second tranche of shares in the Australian company.
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elco agreed in May last year to China led to the arrest of 18 employees. Melco buy 19.9 percent of Crown, its CEO Lawrence Ho told the Financial Times at former joint venture partner, in the time that he didn’t endorse the practices a two-stage deal worth US$1.2 being deployed. A renewed partnership between the billion. It bought the first tranche of 67.7 million shares in June last year, but subsequently operators had been seen as a positive deferred the acquisition of a second tranche development that would provide Crown with of the same amount to allow time for probity access to Melco’s deep database of Chinese premium customers ahead of the opening checks by Australia’s regulators. The extension followed an investigative of its Barangaroo property later this year. The VIP-only resort is only permitted to news report alleging extensive malpractice at Crown, including links to organised crime and offer table games and will be the second largefast-tracking of visas for Chinese high rollers. scale casino in Sydney, which some analysts say may not be able to support However, it was not the competition. the regulatory probes that “We estimate VIP scuppered the deal. Melco margins will compress and announced in mid-February We estimate are unlikely to recover,” it would not pursue the VIP margins will JP Morgan wrote in an acquisition due to the in-depth analysis of the economic impact of the compress and Australian gaming industry. coronavirus on the region are unlikely to “Although we believe initial and would not seek a seat interest in Barangaroo will on Crown’s board. recover. be strong when it opens The company said at 2-3 months earlier than this time it plans to focus originally announced, the on its core business and that its capital will be deployed on investment in negative impact of two casinos in one location “core” assets, such as Macau, the Philippines, is gambler ‘choice’. Reduced margins from offering better sweeteners to capture local, Cyprus and its pursuit of a license in Japan. “While Melco believes Crown has world- finite, gambling dollars poses a real risk.” The firm also said it expects turnover class assets that are complementary to its global business, it is Melco’s belief that, at to fall in Melbourne, with inbound tourists this time, its capital needs to be deployed on likely to choose Sydney due to the new property opening. its core assets,” it said. “In the lead-up to Barangaroo’s opening at The two companies broke up a decadelong joint venture in 2017, which had been the end of CY20, we believe both casinos will seen as one of the most successful in the seek to ‘steal’ customers through offerings, gaming industry. Together, Crown and Melco sweeteners, and program matching,” it said. Australia’s operators were already facing developed the City of Dreams complex in an uncertain future for 2020 even before Macau and Manila. However, the relationship soured after the outbreak of the coronavirus took its toll Crown’s aggressive marketing tactics in Mainland on travel. The country’s tourism industry
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Asia Gaming Briefings | March 2020
