Casino operator Melco drops Crown deal as coronavirus hits travel

[BENGALURU] Melco Resorts & Entertainment has pulled the plug on a stake purchase in Australia's Crown Resorts citing plunging traveller numbers and casino closures brought about by the deadly coronavirus.

The US-listed casino operator dropped the second tranche of a 19.99 per cent buy-in of Crown from billionaire James Packer, which was earlier valued at A$1.76 billion (S$1.65 billion).

The Macau-focused company controlled by Lawrence Ho pointed to the rapid outbreak of the coronavirus that has killed more than 600 people and infected over 30,000 as behind the pullout.

The virus has also led to Macau, the world's biggest gambling hub, ordering all casino operators to suspend operations for two weeks. The Chinese territory has confirmed at least 10 cases so far.

A string of flight cancellations and companies closing stores and factories is also pounding business activity crucial to the growth of the world's second-largest economy and key source of international gamblers.

Virus aside, the deal has been far from plain sailing with concerns raised by regulators from the outset over links with Stanley Ho, Lawrence Ho's father, who was previously under investigation by authorities in Australia and the United States.

Also, in August, Mr Packer froze the partial sale pending an investigation into alleged criminal activity at Crown's Australian operations.

Melco, which currently holds a 9.99 per cent stake purchased last year, also shelved plans for a seat on the Australian company's board.

"I think them not going ahead with the second tranche, it does make people question whether they're a seller of the first trance," said portfolio manager Jun Bei Liu of Tribeca Investment Partners.

Crown is coming off a major management shake-up last month which included filling a chief executive post that had been vacant for about three years.

Its shares opened trade weaker but were last up 0.3 per cent at A$11.645 at midday on Friday in Sydney. The stock has been under pressure of late in the wake of the virus outbreak.

The drop in visitors from China will be of key interest for investors when Crown reports its half-yearly earnings results on Feb 19.

With a shift toward core investment, Melco will now focus on Macau, the Philippines and Cyprus and is still vying for a casino license in Japan, it said in a regulatory filing on Thursday.

REUTERS