Bally's Takeover Offer Increase Pursuit by Star Entertainment for $158 Million
In a series of significant developments, American gaming giant Bally's is edging closer to acquiring a controlling stake in troubled Australian casino operator Star Entertainment. The latest updates indicate that negotiations are progressing, with complexities arising from Star's ownership of the Queen's Wharf Brisbane project and involvement of Hong Kong investors.
On June 25, 98% of Star Entertainment shareholders approved a rescue package deal involving Bally's and Bruce Mathieson’s Investment Holdings. Bally's will invest approximately AU$200 million (US$130 million) for about a 38% stake, while Mathieson’s group will invest AU$100 million (US$65 million) for around 23%. Together, they will hold a controlling stake in Star Entertainment. This deal follows Star's financial difficulties, particularly related to the Queen’s Wharf Brisbane project, which had accrued AU$1.6 billion (US$1 billion) of debt.
Bally's has been clear that it wants to keep all of Star's assets intact, including the Brisbane operations. Despite the Hong Kong investors' attempts to dissolve their equity buyout of the Queen’s Wharf Brisbane stake, the deal with them has fallen through. However, Star Entertainment and its Hong Kong partners have extended talks on the equity buyout to July 31, aiming to resolve commercial and management transition issues smoothly. Some payment obligations from Star to the partners remain in effect despite the extension.
The Australian Financial Review reported that Star and Bally's have been in discussions about the acquisition. Star Entertainment is reportedly seeking to increase Bally's takeover offer, and if Mathieson's endorsement is any indication, he may be open to increasing his equity position in the company and securing board seats under Bally's ownership.
If approved by Star's creditors and shareholders, the deal would prevent the collapse of Star Entertainment. Bally's is paying $149.8 million to acquire Star Entertainment, a sum preferred by some Star investors over the sale to Hong Kong-based Chow Tai Fook and Far East Consortium for $31 million. Bruce Mathieson, Star's largest individual shareholder, has endorsed the Bally's offer sheet.
Under the terms of the Bally's bid, Star would maintain control of its Australian integrated resorts. The acceptance of the Bally's offer by Star is contingent on creditors and shareholders voting in favor of it. Star may be facing difficulties in the sale of Queens Wharf assets and the sale of its Sydney convention and meeting space, which could exacerbate their liquidity crisis.
The negotiations between Star and Bally's are ongoing, with the final outcome still uncertain. Star is rumoured to be running on fumes with a cash burn rate that might leave it with just a few days of operation. Bally's still holds a strong bargaining position due to Star's liquidity crisis. The complexity of Star's Brisbane casino ownership involving Hong Kong partners remains unresolved but under active negotiation, with Bally’s positioning to oversee the entire asset portfolio as it aims to stabilise and grow Star's business.
In the ongoing negotiations between Star Entertainment and Bally's, the gaming giant is aiming to increase its stake following rumors of Star Entertainment seeking a higher takeover offer. This potential deal, if approved, would involve complex mergers and acquisitions in the Asia Pacific gaming industry, given Star's financial struggles and the involvement of Hong Kong investors. The financial implications of this transaction, totaling approximately AU$300 million (US$195 million), are significant for both parties and the broader business world.
