Australia's Star Entertainment surges on deal offer from Hard Rock consortium

FILE PHOTO: Star Entertainment logo is seen in this illustration taken, April 23, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Australian casino operator Star Entertainment said on Monday it had received offers for take-control transactions from several external parties, including a consortium of investors that hosts a local partner of Hard Rock Hotels and Casinos.

A tourist poses for pictures at the main sign of The Star Casino at Pyrmont Bay in Sydney, Australia, July 4, 2013. REUTERS/Daniel Munoz/File photo

Shares of Star Entertainment surged as much as 22.2% to top the benchmark ASX 200 index, which was up 0.5%, as of 0141 GMT.

"At this stage, none of the approaches has resulted in substantive discussions," Star said in a statement, adding that the proposals so far have been confidential, unsolicited, and non-binding.

Star clarified that the consortium includes Hard Rock Hotels & Resorts (Pacific), and it has not received a proposal directly from Hard Rock Hotels and Casinos.

The Australian Financial Review had reported earlier in the day that a consortium led by U.S.-based Hard Rock was considering taking control of Star with a proposal that would inject more capital into the company.

Star would be rebranded and its properties separated from the casino operator under Hard Rock's proposal, according to the AFR report.

"If successful, the proposal would transform Star's properties into entertainment destinations less reliant on casino revenue and focused on live music, food and beverages, and hotels," the report added.

Hard Rock owns over a dozen casinos including in Hollywood, Cincinnati and Atlantic City, and had recently announced it would close The Mirage Hotel & Casino in Las Vegas for renovations in July.

Star, which is facing a second inquiry into its Sydney casino operations, has seen top executives including its CEO and finance chief step down in recent months as it grapples tough trading conditions amid intense competition and cost pressures.

Star's licence to operate its Sydney casino was suspended in October 2022, after an investigation by an independent commission found it had failed to prevent money laundering and criminal activity.

(Reporting by Himanshi Akhand in Bengaluru; Editing by Tom Hogue and Sherry Jacob-Phillips)