May 20 (Reuters) - Star Entertainment (SGR.AX), opens new tab said on Monday a consortium led by Florida-based Hard Rock Hotels & Casinos is considering a bid for the cash-strapped Australian firm, sending its shares 20% higher.
A potential takeover by entertainment giant Hard Rock would provide a much-needed financial lifeline to Star Entertainment, which has been plagued by a regulatory inquiry into its flagship Sydney casino operation and an executive exodus.
Star, which had a market value of A$1.29 billion ($863.66 million) as of Monday's close, said it has been approached by a consortium of investors which includes Hard Rock Hotels & Resorts (Pacific).
The company said it understands Hard Rock Hotels is a local partner of Hard Rock.
Earlier in the day, Star said it had received "inbound interest from a number of external parties" but flagged none of them had yet resulted in "substantive discussions". Star was responding to an Australian Financial Review report, opens new tab that a consortium led by Hard Rock was considering taking control of Star.
The Hard Rock bid will aim to make Star primarily source its earnings from restaurants, hotels and entertainment, the report said, adding that the Australian company would become less dependent on casino income.
Hard Rock did not immediately respond to a Reuters' request for comment.
"While the market has reacted positively to the speculation about an acquisition by Hard Rock, Star Entertainment Group's 73,000 shareholders will have a large say in the outcome of this," said Ben Williamson, co-founder and co-CEO at investor marketing platform InvestorHub.
"Star will need to engage its entire base to ensure any takeover is successful." Shares of Star ended 20% higher at A$0.54 on Monday, posting their best session since early March and making them the top gainer on the Australian exchange, which rose 0.6%
Source: Reuters
