Local reports in Australia yesterday (20 May) said Hard Rock was part of a group seeking to invest in Star. The Australian Financial Review suggested Star land-based casinos would rebrand all under the Hard Rock name should the deal proceed.
Responding to the reports, Star said it had received “inbound interest” from several external parties over potential transactions. However, it also said the nature of this is unsolicited, preliminary and non-binding, with no approach resulting in substantive discussions.
Star also referred to links with Hard Rock, saying it had not received a proposal directly from the group. It did, however, claim one consortium featuring the Hard Rock Hotels & Resorts Pacific regional division of Hard Rock had shown interest.
Hard Rock has now issued its own response to the reports, denying any interest in a possible deal. The group also said it did not authorise the use of its brand in connection with any third-party proposal.
“We want to make it clear that Hard Rock International is not involved in, nor has it authorised, any discussions, activities or negotiations on its behalf in connection with a proposed bid for Star,” Hard Rock said.
“Hard Rock International has similarly not authorised the use of the Hard Rock brand in connection with any proposed bid for Star by any third party.”
Hard Rock could pursue legal action over matter
Going further in its response, Hard Rock said it takes any misuse of its brand “seriously” and it could consider taking legal action over the issue.
“Our brand is built on a legacy of integrity, excellence and a commitment to our guests, partners and team members worldwide,” Hard Rock said. “Any misuse of the Hard Rock name in unauthorised business dealings is taken very seriously.
“We are currently investigating this matter and will pursue all necessary legal actions to protect our brand and reputation.
“We urge stakeholders and the public to rely only on official communications from Hard Rock International for accurate information regarding our business activities and partnerships.”
Star acknowledged the statement and issued its own response. It outlined that it has not engaged in substantive discussions with the consortium in respect of its proposal.
“The company today notes the statement issued by Hard Rock International which clarifies that Hard Rock International is not involved in, nor has it authorised, any discussions, activities or negotiations on its behalf in connection with a proposal for Star,” it said.
“Star will keep shareholders informed in accordance with its continuous disclosure obligations.”
M&A elsewhere for Hard Rock
While Hard Rock is seemingly not interested in making a move for Star, it has been active in terms of M&A in recent months.
In March, the Hard Rock Digital arm struck a deal to acquire certain US-facing B2C assets from 888. However, details of which assets Hard Rock will purchase have not been disclosed.
888, which only launched its strategic review several weeks prior to this, says it expects the deal to complete in phases. It is aiming to finalise the sale by Q4 this year.
Uncertain times for Star as Bell Two Inquiry launches
Possible investment in Star would have been welcome relief for the group, which has been under the cosh in recent times.
In February, the second Bell inquiry launched, focusing on Star’s activities in New South Wales (NSW) and fallout of the first Bell report. There is also a focus on the culture at Star and whether it has the finances to support Star Casino.
There was positive news out of Star last week that linked to the Bell Two inquiry. Authorities in Queensland announced a further delay to Star’s planned licence suspension in the state.
Star was sanctioned in Queensland in December 2022 over a series of failings. The operator was slapped with a fine of AU$100.0m (£52.4m/€61.3m/US$66.6m) and informed its licence would be suspended.
Star was given an initial 12 months to resolve issues and prove it was suitable for a licence. The 1 December 2023 deadline was pushed back to 31 May this year after Star submitted a draft remediation plan to address issues.
However, this deadline has now been extended again to 20 December of this year. This is due to Queensland authorities wanting to see the second Bell Inquiry before making a decision on the licence.
Changes at the top for Star
The uncertainty does not stop there for Star. In recent months, the group has seen several senior personnel leave the business, with replacements yet to be announced.
Group CEO and managing Robbie Cooke left in March, as did chief financial officer Christina Katsibouba. Meanwhile, Jessica Mellor is stepping down as CEO of Star Gold Coast.
In addition, David Foster announced his departure as executive chair. Incidentally, Foster had taken on additional duties following Cooke’s exit as CEO.
Alongside this, Star last month published a trading update for Q3. This showed a net loss of $6.8m, an improvement on the $49.7m loss in the previous Q3.
Revenue in Q3 fell 4.6% to €419.2m, while normalised EBITDA dropped 11.5% to $37.9m.
Original article: https://igamingbusiness.com/strategy/ma/hard-rock-denies-talks-over-star-investment/
