【007 cassino】Star Entertainment's largest shareholder supports Bally's buyout

Mathieson, a prominent figure in Australia’s pub and gaming industry, currently holds approximately 10% of Star’s share capital.

His support could prove pivotal as the embattled Australian casino operator assesses competing financial options aimed at stabilizing its operations and restoring investor confidence.

Local reports indicate that Mathieson is prepared to further increase his holding in Star and potentially take a seat on the company’s board should the Bally’s offer be accepted.

According to The Australian Financial Review, Mathieson has regulatory approval to raise his stake to as much as 20%, a development that underscores the seriousness of his commitment to the Bally’s-led proposal.

His willingness to contribute fresh capital highlights a broader strategy to inject much-needed funding into Star, which has been struggling with regulatory, operational, and financial challenges over the past two years.

Bally’s has offered AU$250m for a controlling 50.1% interest in Star. This includes not just financial investment but also a plan to rehabilitate the company’s performance, leveraging Bally’s experience in turning around distressed gaming assets.

The proposal comes at a time when Star is grappling with declining revenues, legal troubles, and leadership instability, following multiple regulatory inquiries and management shake-ups in recent years.

Star remains quiet

Star has so far not made any public comments regarding Bally’s bid beyond confirming receipt of the proposal two weeks ago.

This silence stems from an existing exclusivity agreement Star signed with its Hong Kong-based joint venture partners, Chow Tai Fook Enterprises and Far East Consortium.

These partners each hold a 25% stake in The Star Brisbane, a new AU$1.6bn development that commenced operations in August 2023. The agreement prevents Star from engaging with other potential investors or buyers until after 25 March.

As part of that earlier agreement, Star will sell its 50% stake in The Star Brisbane to Chow Tai Fook and Far East Consortium.

Additionally, a separate financing arrangement with private equity firm Salter Brothers has been under consideration.

However, Mathieson’s decision to back Bally’s instead of either of these alternative paths suggests he sees greater long-term value in the American group’s proposal.

Bally’s chair sees value in Star

One of the key figures driving Bally’s bid is Chairman Soo Kim, who recently spoke at Next.io’s New York Summit. He has expressed confidence that Star’s value lies in keeping its portfolio intact rather than selling assets piecemeal.

Kim has argued that with the right operational strategy and governance reforms, Star could recover its standing in Australia’s gaming industry and deliver better shareholder returns than under a breakup scenario.

Bally’s, headquartered in Rhode Island, has a track record of acquiring underperforming casino assets and implementing turnaround strategies across the U.S.

The company operates dozens of properties and has diversified its revenue streams with online gaming and sports betting ventures.

Its potential entry into the Australian market marks a strategic expansion into the Asia-Pacific region, where casino operators are competing for a growing but heavily regulated gaming audience.

While the Bally’s offer introduces a new dimension to Star’s ongoing restructuring efforts, it also adds pressure on the current leadership to weigh the merits of competing proposals and determine the best course forward for shareholders and stakeholders.

Regulatory scrutiny is likely to be intense if the deal proceeds, particularly given the history of compliance issues faced by Star, Crown Resorts and other casino operators in the Australian market.