Hong Kong-based Melco Resorts & Entertainment (Melco) has pulled out of an $880 million deal with Crown Resorts (ASX: CWN).
The deal to acquire a bundle of shares in the Australian casino giant was canned as a result of the coronavirus according to Melco, which now intends to focus on its core operations.
The acquisition of shares in Crown was the second tranche of a $1.76 billion buyout of the Australian group by Melco, worth around 20 per cent of the entire company.
The deal was already subject to a local investigation by the NSW Independent Liquor and Gambling Authority for possible contraventions of the Casino Control Act.
In a statement released by Melco on Thursday afternoon the Hong Kong-based casino and entertainment, headed by James Packer's former business partner Lawrence Ho, said the company was pulling out of all non-core investments in 2020.
"Due to the impact of the coronavirus epidemic, including the severe drop in tourism in Asia to Integrated Resort 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," says Melco."
"This decision reflects Melco's commitment towards its employees, customers, business partners and other stakeholders and observance of the highest degree of responsibility until such time as the global health emergency and the related travel restrictions that affect a significant part of its customer base are lifted."
"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."
Melco currently holds 67,675,000 shares in Crown but will no longer acquire the remaining 67,675,000 shares it intended to.
"Melco does not currently intend to increase its existing shareholding in Crown from its current position. Melco also does not intend to seek representation on Crown's board."
Lawrence Ho is the son of Macau's most influential casino magnate Stanley Ho, who held a government-granted monopoly on the Macau gambling industry for decades and allegedly had ties to the Kung Lok triad organised crime syndicate based in Canada.
Up until 28 June this year, Lawrence Ho was a director of Lanceford Company Limited.
Association with Stanley Ho is prohibited under certain anti-crime licensing conditions of the Barangaroo Crown property, which is currently under construction in Sydney.
Shares in Crown are up 0.26 per cent to $11.64 per share at 10.40am AEDT.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support