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Australia – Melco tipped to try for outright control of Crown Resorts

By - 28 August 2019

Crown Resorts is now a prime target for takeover by Melco Resorts & Entertainment, according to gaming analyst Sanford C Bernstein who believes Melco will be approved for its acquisition of a 19.99 per cent share in the Australian casino group before bidding for full ownership.

Bernstein’s Vitaly Umansky, Eunice Lee and Kelsey Zhu believe that despite ‘sensationalistic’ news reports linking Melco Chairman and CEO Lawrence Ho to his father Macau gaming guru Stanley Ho, with whom Crown is banned from doing any business with, the deal will still go through. They said it would be ‘unfortunate for both Melco and Australia’s gaming industry’ if the deal was railroaded.

The analysts said: “We expect Melco and Lawrence Ho to clear probity review and receive regulatory approval on the merits. While Stanley Ho is still alive, he is completely out of the gaming business and is in full retirement. Stanley Ho has been pretty much out of the whole gaming picture since 2009 after suffering from a fall at home and being confined to a hospital for seven months thereafter.”

The Bernstein analysts believe Melco will then buy James Packer’s remaining 26.8 per cent in Crown taking it to a controlling 46.8 share.

“Assuming a full acquisition of Crown occurs, Melco will become a truly global and more diversified gaming company, enhancing Melco’s global branding in its bid for a Japan IR.”

They added: “There is risk that in such an environment a Melco acquisition (or even the board seat it seeks with the 19.99 per cent interest) could be denied by the regulators, but this would be unfortunate for both Melco and Australia’s gaming industry. Melco and Crown had been long-time partners. However, politics being what it is, there is no assurance that such regulatory approval will be given (in light of both the prevailing China-Australia tensions that exist and the fog surrounding Crown’s links to junkets).”

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