The Crown Resorts Ltd (ASX: CWN) share price will be one to watch on Friday after the casino and resorts operator provided an update on the Melco transaction.
What is the transaction?
At the end of May, James Packer’s Consolidated Press Holdings (CPH) announced the sale of a 19.99% stake in Crown Resorts for $1.76 billion or $13.00 per share to Lawrence Ho’s Melco Resorts and Entertainment.
Mr Packer advised that this was in order to diversify CPH’s investment portfolio.
At the time, Mr Packer said: “Crown has been a massive part of my life for the last 20 years and that absolutely remains the case today – my continuing Crown shareholding represents my single largest investment. I am still vitally interested in Crown’s success as a world class resort and gaming business. The sale allows me to continue my long term involvement with Crown and at the same time to better diversify my investment portfolio.”
The first tranche completed in June last year, with the second tranche remaining subject to written notice from several regulators that it is a suitable group to manage a casino.
However, Melco Resorts and Entertainment has just announced that it has now pulled the plug on the deal.
Melco Resorts has pulled out of the deal due to concerns over the impact of the coronavirus outbreak.
It advised: “Due to the impact of the coronavirus epidemic, including the severe drop in tourism in Asia to Integrated Resort (IR) facilities in the region, and the recent decision by the Macau SAR government to close all casinos in Macau, Melco has taken the decision to reassess all non-core investments to be made in 2020.”
“As a result of this decision, Melco will not pursue its planned investment in Australia for the second tranche of shares in Crown Resorts Limited. While Melco believes Crown has world-class assets that are complementary to its global business, it is Melco’s belief that, at this time, its capital needs to be deployed on its core assets.”
The two parties have agreed to terminate the obligation to purchase the second tranche of Crown shares under the purchase agreement.
The post Crown shares on watch after coronavirus concerns hit Melco transaction appeared first on Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020