What’s really going on in the recent game of he said, she said between Hard Rock International and Star Entertainment?
It all started with a Star Entertainment ASX filing at 9:10am Sydney time (7:10am Macau time) Monday morning in which Star noted “certain media articles speculating on potential corporate activity involving the Star.” The company “confirm[ed] that it has received inbound interest from number of external parties regarding potential transactions.”
The media speculation in question was from the Australian Financial Review, who confidently reported that “a consortium led by Hard Rock is interested in acquiring and potentially rebranding Star.” The AFR followed up with a number of Hard Rock stories and began breathless speculation on a Hard Rock acquisition of Star and the implications of same. A Star share price bump in the order of 20% ensued! Gripping stuff!
The Star filing was lodged just 50 minutes before IAG Breakfast Briefing is published, at 8am Macau time (10am Sydney time), so IAG reported on both the filing and the AFR assertion, but history has taught us that just because an Australian media outlet says something does not make it so.
Mere minutes after going to press, I decided to contact Hard Rock in the US, who immediately flatly denied the whole thing, with an unequivocal, “Hard Rock is not a member of any group looking to acquire Star or leading any such initiative.” This lead to IAG updating our story at 8:30am Macau time (10:30am Sydney time), to include this quote.
Some 22 minutes later, at 10:52am Sydney time, Star lodged another filing stating that it had been dealing with an entity named “Hard Rock Hotels & Resorts (Pacific)”, which Star “understands is a local partner of Hard Rock”, previously defined in the statement as Hard Rock Hotels & Casinos.
This ultimately led to Hard Rock in the US issuing a press statement overnight Australian time on Monday night, directly refuting the Star announcement. “We want to make it clear that Hard Rock International is not involved in, nor has it authorized, any discussions, activities or negotiations on its behalf in connection with a proposed bid for Star,” the company said in its statement. “Hard Rock International has similarly not authorized the use of the Hard Rock brand in connection with any proposed bid for Star by any third party.”
IAG published this on IAG Breakfast Briefing on Tuesday morning, at 8:47am Sydney time (6:47am Macau time). Lo and behold, some 79 minutes later, Star lodged yet another filing, quickly back peddling with, “Star has not received any proposal directly from Hard Rock” and describing the proposal received from “a consortium of investors which included the entity ‘Hard Rock Hotels & Resorts (Pacific)’” as “incomplete and indicative”. Star went on to say that it had “not engaged in substantive discussions with the consortium” and that it “notes the statement issued by Hard Rock International”. Unsurprisingly, Star did not repeat its “understanding” that Hard Rock Hotels & Resorts (Pacific) is a local partner of Hard Rock Hotels & Casinos.
So, what’s the real backstory here?
IAG has learnt that for many years, there has been a businessman – Patrick Farrugia – who has been representing himself to be in some way associated with “Hard Rock”, but it turns out that Farrugia’s “Hard Rock Hotels & Resorts (Pacific)” isn’t as close to the US-based Hard Rock Hotels and Casinos, or its Hard Rock International arm, as the name might suggest. In fact, we are reliably informed that he has been the recipient of a number of cease-and-desist letters in an effort to curtail Farrugia’s activities. Apparently Farrugia was merely associated with a long-defunct Hard Rock Café franchise in Surfer’s Paradise.
If Star had bothered to simply pick up the phone and call Hard Rock in the US (IAG can give them the number), and make some simple enquiries with the right people as to whether “Hard Rock Hotels & Resorts (Pacific)” was entitled to represent the famous casino company which recently purchased the Mirage in Las Vegas, they would have been met with an emphatic, “No!”
Basic due diligence, anyone? Perhaps here’s yet another example of why the people who have been running Star don’t deserve a license to run a chook raffle, let alone a billion-dollar integrated resort in the heart of Sydney.
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