Skift Take

Gaming companies are hard hit by the coronavirus pandemic, but Melco seems to be suffering more than others — if its latest money-losing deal with Blackstone goes to shows.

Australia’s Crown Resorts said on Wednesday that U.S. private equity firm Blackstone Group had bought all of its shares held by Macau casino operator Melco Resorts & Entertainment, sending its share price soaring.

Crown said an entity controlled by Blackstone had bought about 67.7 million of its shares from Melco, which in February had shelved a bid to raise its holding in the Australian casino operator due to a drop in traveler numbers.

The shares were transferred at a price of A$8.15 each, putting the transaction value at A$551.6 million ($359.04 million), and representing a discount of 5.2 percent to the stock’s last closing price.

The stake that changed hands represented about 9.99 percent of the issued capital of Crown. Based on Refinitiv data as of Feb. 6, the stake represents the entire holding of Melco’s nominee.

Amid plunging traveler numbers due to curbs imposed to contain the new coronavirus, Melco scrapped its planned purchase of a second 9.99 percent stake in Crown from billionaire James Packer, in a deal that had already raised regulatory concern.

Since then, Crown’s shares have slipped about 28.1 percent as of the last close, as Australia’s travel curbs slammed casino’s and kept away big-spending VIP Chinese tourists and even domestic players.

Following the announcement, Crown’s shares surged as much as 12.3 percent to their highest level since March 6, against a 0.4 percent gain on the benchmark ASX200 index by 0022 GMT.

($1 = 1.5363 Australian dollars)

(Reporting by Rashmi Ashok in Bengaluru; Editing by Christopher Cushing)

This article was from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].


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Tags: blackstone, casinos, crown resorts, gaming

Photo credit: Southbank skyline from across the Yarra at sunset, with views of Eureka Tower, Freshwater Place, Prima Tower and Crown Tower, Melbourne in Victoria, Australia Romain Pontida / Flickr

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