Star Entertainment Surrenders to Bally's Au$300 Million Takeover Offer
Bally's proposes a $300 million buyout of Star Entertainment.
Matthias Friess| Edited by Angela Burke| Published on: 08.04.2025. Updated on: 24.04.2025.
- Bally's swoops in on Star Entertainment with a takeover deal worth over Au$300 million
- Star's last dance with Salter Brothers' refinancing plan ends in disaster
Gambling titan Bally's reels in Star Entertainment with a whopping Au$300 million takeover bid (Embedded image). © Public Domain
A Tale of Two Titans: Bally's Takes Control
Star Entertainment has hand over the reins to US-based casino behemoth, Bally's, in a deal inked yesterday worth an estimated Au$300 million (approx. Euro 180 million) [Link]. This takeover bid emerged as the lifeline Star Entertainment was clinging to, with Bally's being the sole suitor since March 10, 2025, when its offer was first presented [Link].
Ironically, negotiations for a potential refinancing deal of Au$940 million (approx. Euro 565 million) from Australia's Salter Brothers in Melbourne crumbled last week [Link].
By tomorrow, Star Entertainment will welcome the first payment installment of Au$100 million (approx. Euro 60 million) from Bally's, which is devoid of shareholder approval. This payment translates to approximately 15% ownership of the company. The bonds Bally's received will expire on July 2, 2029, and bear an annual interest rate of 9%.
In addition to the initial transfer, Bally's will also receive bonds worth Au$66.6 million (approx. Euro 40 million) that cannot be traded for shares and must be repaid at a later date.
Star's Rough Ride on the Exchange
Star Entertainment faced a turbulent ride in August 2024, as the deprying Australian Stock Exchange (ASX) slammed the brakes on trading for the gambling conglomerate. Failure to submit a timely financial report to the ASX ultimately led to the suspension.
The sting was further felt when the scathing Adam Bell report, popularly known as the Bell Report, was unveiled [Link]. The report exposed fraudulent activities by employees, false records designed to simulate responsible gambling measures, and a glitch resulting in a loss of approximately Au$3 million (approx. Euro 1.9 million). Moreover, the report brought to light violations of legally mandated player breaks in Star Entertainment's casinos.
Bally's Gearing up for Another Installment
Bally's plans to transfer the remaining Au$200 million (approx. Euro 120 million) to Star Entertainment at a later date, subject to shareholder and regulatory approval. In the event that approval is not obtained by October 7, the amount can be distributed in two installments of Au$100 million (approx. Euro 60 million) each.
In sum, Bally's has become Star Entertainment's knight in shining armor, promising to rescue the financially stricken company and potentially transform it into Australia's premier casino destination.
Enrichment Data:
The Nitty-Gritty
- Investment Framework: The Au$300 million investment consists of two tranches. The initial tranche of Au$100 million comprises convertible notes and subordinated debt, providing immediate financial relief. The second tranche of Au$200 million (with Au$100 million contributed by Star's largest shareholder, Bruce Mathieson) requires shareholder and regulatory approval, which must be secured by October 7, 2025 [3][4].
- Shareholder Structure: Upon completion, Bally's stands to attain a controlling stake in Star Entertainment, holding a potential 50.1% to 56.7% share on a fully diluted basis, contingent on fulfilling all necessary approvals [4][5].
The Aftermath
- Financial Lifeline: The takeover offers Star Entertainment a much-needed cash infusion, potentially warding off financial bankruptcy and addressing ongoing regulatory challenges such as money laundering investigations and revenue slumps [4][5].
- Regulatory Approvals: The deal necessitates approval from both shareholders and the Foreign Investment Review Board. Although a shareholder meeting is scheduled for June 2025, there is no definitive timeline for regulatory approval [3][4].
- Strategic Positioning: This takeover could elevate Bally's to a dominant player in the regional casino industry, carving out a strong presence in the Australian market [4][5].
All told, this agreement offers Star Entertainment a reprieve while signaling an expansionary chapter for Bally's in the Australian market. However, the consummation of this deal remains contingent on satisfying various regulatory and shareholder requirements.
- The sole suitor, Bally's, agreed to acquire Star Entertainment for a staggering Au$300 million, acting as a lifeline for the finances of the business and casinos.
- In the deal, Bally's will initially take over 15% ownership of Star Entertainment with an initial payment installment of Au$100 million, to be followed by an additional Au$120 million at a later date, subject to shareholder and regulatory approval.
- The takeover also includes bonds worth Au$66.6 million that cannot be traded for shares and must be repaid at a later date, as part of the updated investment structure.
- The other aspect of the Au$300 million investment involves a second tranche of Au$200 million, which requires approval from shareholders and regulatory bodies, with a potential distribution of two Au$100 million installments if approval is not obtained by October 7.
