Hard Rock Hotel mulls bid for Star Entertainment

Shares in troubled Australian casino operator Star Entertainment have soared after it confirmed that suitors approached the company, including a Hard Rock Hotels & Resorts consortium — a potential lifeline for the business as its future hangs in the balance.

Star “has received inbound interest from a number of external parties regarding potential transactions”, the Sydney-based company said early on Monday. “At this stage, none of the approaches has resulted in substantive discussions.”

Shortly afterwards, Star said in a second statement that one of the possible buyers was a consortium of investors that included Hard Rock Hotels & Resorts (Pacific).

It said Hard Rock Hotel & Casino, operator of The Mirage in Las Vegas and other casino resorts in North America, had recently submitted an offer. The proposal is understood to include injecting fresh capital into Star, re-branding the company and separating its properties from the casinos.

Star’s future in Sydney, home to the company’s flagship casino, is uncertain as a fresh inquiry determines whether it has made enough progress into addressing wrongdoing to keep its gaming license.

The casino has been run by a government-appointed manager since a damning report in 2022 found it had lax anti-money laundering controls, allowed patrons to flout China’s capital controls and encouraged problem gamblers.

Star’s chief executive and chairman resigned this year and before today, the company’s shares had tumbled 60 per cent in the past 12 months.

The shares jumped as much as 22 per cent after Star’s statements on Monday. The stock was trading up 17 per cent at 9.10am, giving Star a market value of $1.5 billion.

It’s not clear what any successful buyer of Star would end up owning. Star told the Sydney inquiry last week that it didn’t consider itself fit to operate the city casino in its own right. It argued that the current arrangement that allows Star to run the casino with an external manager should be extended.

The Sydney inquiry’s final report is due on July 31. Meanwhile, Star’s two other casinos — on the Gold Coast and in Brisbane — are also operating under government caretakers.

Hard Rock is believed to be working with Australian and US investors on its Star proposal and is being advised by KPMG. The bid aims to turn the Australian company into a business less dependent on casino income and more focused on entertainment, restaurants and hotels, according to reports.

Star’s main casino rival in Australia, Crown Resorts, went through similar suitability inquiries in recent years in NSW, Victoria and WA that exposed a litany of wrongdoing.

Crown, now owned by Blackstone, in March this year was allowed to keep the licence to operate its flagship Melbourne casino after the regulator judged it had undertaken sufficient governance and anti-money laundering reforms under its government monitor.