Crown and Melco Deal on Hold
The bad news just keeps coming for Crown Resorts. First, there was the recent scandal linking the casino operator with elements of organized crime. Now, a proposed deal with Melco Resorts & Entertainment has been put on hold due to an impending investigation.
The Ho Deal
The deal between Crown and Melco was announced back in June of this year. Melco, which is headed by CEO Lawrence Ho, intended to buy a 20% stake in Crown. This was going to be made possible by James Packer, the Aussie billionaire who helped create the gambling giant.
Packer was going to sell 20% of his shares in an effort to step back and focus on personal issues. The deal would’ve seen Ho buy 135.35 million shares at $13 apiece. The resulting transaction would’ve come out to $1.76 billion.
The Wynn Deal
Prior to the deal with Ho, Packer was being courted by Wynn Resorts. However, instead of seeking to buy a percentage, Wynn was interested in the entirety of Crown Resorts. They bid $10 billion, but a premature announcement from Crown caused them to retract the offer. Afterwards, the two sides never got back to the negotiating table.
The Long Shadow of Stanley Ho
The deal between Melco and Crown was made public on June 6th. However, before anything concrete could happen, it was already facing obstacles. Most of this came in the form of the New South Wales Independent Liquor and Gaming Authority. The main sticking point was the involvement of the Ho family, including Lawrence’s billionaire dad, Stanley Ho.
Stanley Ho is a legend in the gambling world. In fact, he’s often been referred to as the Godfather of Gambling. Now 97 years old, Ho held a government-granted monopoly on Macau gambling for 75 years. He managed to parlay that into a massive fortune, and his SJM Holdings currently owns 19 casinos in Macau. He also owns businesses in areas ranging from banking to the entertainment industry.
However, in addition to all his impressive accomplishments, Ho has been accused of lots of shady dealings. The chief allegations involve his supposed connections with Chinese organized crime. Chief among them is a gang known as Kung Lo, which are involved in everything from drugs to loan sharking.
It should be noted that the Ho family has denied all these allegations. And most importantly, there’s never been enough evidence to launch any serious criminal proceedings.
Despite staying out of legal trouble, Stanley Ho’s reputation has often carried a certain stigma. This has been passed along to his son, Lawrence. That’s especially true since Lawrence has taken over a growing role in his elderly father’s business dealings.
Blackballed from Barangaroo
Aussie authorities have long sought to keep Stanley Ho and his associates from gaining a foothold in their country. For example, when Crown Resorts received approval for their Barangaroo project, a provision was created specifically for Ho.
The provision was intended to prevent ““any new business activities or transaction of a material nature between Stanley Huang Sun Ho or a Stanley Ho associated and Crown, any of Crown’s officers, directors or employees or any Crown subsidiary.”
This came about because Packer and Ho have known each other for a long time. They’ve been involved in a number of business dealings, and their names loom large in the world of casino gambling.
When the Crown and Melco deal was announced, authorities called it a violation of the Barangaroo provision. An investigation was immediately launched, headed up by the regulator of New South Wales.
Crown Resorts Scandal
Recently, Crown Resorts has also come under media and governmental scrutiny. The main reason revolves around possible ties with Chinese triads. While this is bad enough, some of these gangs are also said to be involved in sex trafficking.
New South Wales investigators have been having a field day, and politicians across the nation have taken notice. It doesn’t help that the Crown expose brought up the possibility of bribery and corruption within the Aussie government.
The Current State of Affairs
Because of these various impediments, Melco announced they were putting the sale on hold for 60 days. Any investigations should be concluded by that time, allowing all parties to move forward without additional issues.