Mon, Jun 3, 12:08pm by Staff Writer
On Thursday evening, James Packer agreed to sell almost half his stake in Crown Resorts, the casino empire he has nurtured and built over 20 years.
He bypassed the two international investment banking firms advising him and even the board of Crown – his handpicked group of loyal directors.
Mr Packer sold his stake in Crow Resorts for $1.76 billion in a deal that is set to spark plenty of questions, particularly around whether the deal complies with the conditions of a licence with the New South Wales government, the Sydney Morning Herald reports.
Mr Packer’s private investment vehicle on Thursday night said it had sold about half its shares in Crown to the Hong Kong-based Melco Resorts & Entertainment, which runs venues in Macau and once had a joint-venture casino with Crown in the hugely popular Chinese gambling hub.
Melco, which is purchasing the shares from Mr Packer’s private investment company Consolidated Press Holdings, is run by Lawrence Ho, son of the gambling tycoon Stanley Ho, who once enjoyed a monopoly on gambling in Macau.
“I am thrilled Lawrence Ho and Melco have chosen to invest in Crown,” Mr Packer said.
Mr Ho said the two companies shared similar DNA and expressed confidence in Crown’s Barangaroo development in Sydney.
“Crown’s resorts in Perth and Melbourne are world class entertainment destinations and I believe that Crown Sydney, much like Melco’s Morpheus property, will create an architectural icon for the city, the country and the world,” Mr Ho said.
On Wall Street, Melco shares dropped on the announcement and finished 5.6 per cent lower.
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Melco said it intended to pursue representation on Crown’s board once it obtains approval from gaming regulatory authorities across Australia.
The company also signaled it would be willing to increase its stake in Crown.
“Additionally, subject to obtaining requisite regulatory approvals, Melco welcomes the opportunity to increase its ownership in Crown,” Melco said in a statement to the Nasdaq stock exchange.
One regulatory issue could be a 2014 agreement with the New South Wales government which saw Crown promise it would prevent associations with Stanley Ho as a condition of its licence to establish its Barangaroo complex.
That included a clause saying: “Crown will ensure that it prevents …Stanley Huang Sun Ho or a Stanley Ho associated from acquiring any direct, indirect or beneficial interest in Crown, a subsidiary of Crown.”
The agreement also bans any material deals between Crown and Stanley Ho or his associates and precludes Stanley Ho from holding certain roles with Crown.
Stanley Ho has faced allegations of links to organised crime which have long troubled gambling regulators in other jurisdictions. He has denied those allegations.
For 12 years from 2004 Crown was in a joint venture with Melco before ending the partnership in2016 after Crown executives were detained in China.
During that time the companies operated the City of Dreams and Melco Crown resorts in Macau.
Mr Packer, who had held a 46 per cent stake in Crown, said the company would remain a massive part of his life.
“My continuing Crown shareholding presence represents my single largest investment,” Mr Packer said in a statement released late on Thursday night.
“I am still vitally interested in Crown’s success as a world class resort and gaming business.”
The sale of about 20 per cent of Mr Packer’s shares leaves him with about a quarter of the company, worth about $2.3 billion.
Sources close to Mr Packer said he would use the money from the sell-off to diversity his investment interests outside the gambling sector, but would not be “rushing in” to do so.
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