Lawrence Ho Sells His Crown Stock At a $330M Loss

Lawrence Ho has sold his entire holding of Crown stock in a move that cost him $330 million. It’s an unsurprising move given the ongoing investigation into Ho’s business affairs.

The sale leaves James Packer with the most Crown stock. Packer is willing to sell his entire 37% holding in Crown as he continues to step away from the business.

Packer agreed to sell 19.9% of his Crown stock to Lawrence Ho in May 2019. Ho’s company, Melco Resorts, agreed to pay $1.76 billion in two transactions. The first transaction went through without a hitch. The second $880 million purchase never happened and never will.

Ho’s initial purchase triggered a number of flags from the gambling industry’s governing body. New South Wales Independent Liquor & Gaming Authority stepped in and alleged the deal resulted in Crown Resorts violating Crown’s casino licence for its Sydney Barangaroo project.

An agreement prohibited Crown or anyone linked to the company from having any dealings with companies and persons linked to Macau casino mogul Stanley Ho. One of the blacklisted companies listed Lawrence Ho, Stanley Ho’s son, as a director at the time he agreed to purchase Crown stock from Packer.

Investigation Into Crown Stock Sale Begins

The investigation into Lawrence Ho’s purchase of Crown stock began in January 2020. It has been something of a soap opera with legal wrangling all over the place.

Lawrence Ho ruled out buying the remaining 50% of his deal with Packer in February 2020. The courts confirmed they were investigating Lawrence Ho a month later, which sparked more legal proceedings.

NSW wanted access to specific documents held by Melco, but the company blank refused. Melco claimed the documents were private and that courts should not see them. They won their initial court case but lost the subsequent appeal in March 2020.

The ongoing COVID-19 pandemic put the brakes on the investigation during the same month.

Lawrence Ho Sells Crown Stock at an Alarming Loss

Lawrence Ho paid Packer $13 per share for the first 9.99% of Packer’s Crown stock. He sold his entire holding in Crown to investment firm Blackstone for $8.15 per share on April 29. The difference in price equates to a near $330 million hit for Lawrence Ho.

Charles Livingstone is a Monash University professor who specialises in critical gambling studies. He gave two reasons for Lawrence Ho’s hasty exit.

“Macau has been hit hard by internal travel bans and 80 to 90 per cent of Macau’s economy depends on gambling. Most of Mr Ho’s gambling interests reside in Macau. Mr Ho is very focussed on saving his Macau operations.”

Livingstone cited the ongoing investigation as another major reason for Lawrence Ho’s Crown stock sale.

“He wouldn’t want to have his business exposed to the investigation which could result in he, or even Crown, to be found not a fit and proper person to hold a gambling licence. The NSW investigation wrong-footed the deal and it will be followed by similar measures in Victoria and Western Australia.”

Could A Takeover Bid For Crown Be Imminent?

Blackstone’s purchase of Lawrence Ho’s Crown stock has fuelled rumours of a potential takeover. Blackstone is a massive investment company, one with $570 billion worth of assets in its portfolio. It recently purchased Bellagio Las Vegas for $4.25 billion in a sale-leaseback transaction.

The company’s purchase makes it the second-largest holder of Crown stock behind Packer.

Crown shares jumped as much as 12.3% after Blackstone announced the deal to the stock exchange. This resulted in their highest price since March 6. They are currently trading a $9.89 per share, representing a nice $117.8 million return already for Blackstone.

Investors seem confident Blackstone will purchase more Crown stock. Rumours are rife that Packer wants completely out of Crown and Blackstone has the funds to make that happen. Melco and Lawrence Ho were a significant obstacle block for any potential takeover. They are now out of the picture for good.