Crown exits Macau casino JV with Melco
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Crown Resorts, the gambling and resorts group owned by Australian billionaire James Packer, has agreed to sell its remaining stake in its Macau casino joint venture with Melco Resorts and thereby bring an end to the Australian company’s foray in the former Portuguese colony.
The move is likely to now pit the two former partners against each other as casino operators turn their attention to Japan, where the government this year decided to open the world’s third-biggest economy to casino gambling that some analysts estimate could be worth $25bn a year.
Crown will sell its remaining stake in Melco Crown Entertainment to US-listed Melco Resorts, the casino and resort developer controlled by Hong Kong billionaire Lawrence Ho, for $1.2bn. Macau is the only place in China where gambling in casinos is legal.
Melco Resorts will fund its purchase via an underwritten public offering. Mr Ho said:
Despite our positive history with Crown, I made the strategic decision to terminate the joint venture arrangement and allow Melco to pursue Japan alone.
A year ago, Crown began reducing its 34.3 per cent stake in the MCE joint venture and said at the time it “intends to maintain a significant investment in MCE”. It most recently trimmed its stake in the JV in December when management also scrapped plans to pursue a spin-off of its international operations. Crown said it will use the proceeds of its sale to reduce net debt.
Crown shares were up 0.8 per cent in Sydney on Tuesday and hovering close to their highest level in 26 months. Melco shares were down 0.8 per cent in after hours trade in the US.
Crown has gone through something of an upheaval since 18 of its employees were arrested by Chinese authorities last October. Earlier this year, the company shelved plans to spin off a property trust holding most of its Australian assets and announced the departure of its chief executive and chairman.