Asian casino operator Melco Resorts & Entertainment has deferred the acquisition of the second tranche of shares in Crown Resorts following a recent announcement by the NSW Independent Liquor & Gaming Authority that it has launched an inquiry into the transaction.
Melco revealed in May that it had reached an agreement with James Packer’s CPH Crown Holdings Pty Limited (CPH) to acquire a 19.99% stake in Crown Resorts for a total consideration of AU$1.76 billion (HK$9.58 billion), to be completed via two equal, separate payments in June and September.
The first tranche of 67,675,000 shares was closed on 6 June 2019, giving Melco an initial 10% stake, but closure of the second tranche of 67,675,000 shares will now be delayed until the conclusion of the NSW regulator’s inquiry.
Announcing the amendment to terms late Wednesday, Melco said it had reached an agreement with CPH to defer closure of the second tranche from 30 September 2019 until up to 60 days after the conclusion of the inquiry.
The two parties have set a sunset date of 31 May 2020, extendable by six months upon mutual agreement, after which date a termination notice can be issued by either party.
The transaction may also be abandoned should the results of the inquiry impose any restrictions or conditions deemed unacceptable be Melco or CPH.
The NSW Independent Liquor & Gaming Authority announced its inquiry three weeks ago in response to reports by Australian media outlets alleging links between Crown and Asian crime syndicates and questioning the company’s relationship with junket operators. It also questioned the Melco acquisition on the basis that Chairman and CEO Lawrence Ho is the son of Macau casino magnate Stanley Ho, with whom Crown is prohibited from conducting any business as per a 2014 agreement with the regulator.
Lawrence Ho has repeatedly distanced himself from his elderly father, most recently reiterating that he “does not exercise any influence on any financial and operating policies or other matters of these companies.”
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