Star Entertainment (ASX: SGR) Shares Plummet Over 7% Amid Bid Confusion

2 min read | May 21, 2024 04:01 PM AEST | By Team Kalkine Media

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Star Entertainment (ASX: SGR) Shares Plummet Over 7% Amid Bid Confusion — Image source: © Irishka777 | Megapixl.com

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Shares of Australia's Star Entertainment (ASX: SGR) fell as much as 7.41% to AU$0.50 apiece on Tuesday, marking their steepest intraday drop since April 16. This decline comes on the heels of a significant surge of 20% on Monday, driven by speculation surrounding a potential bid involving a consortium linked to Hard Rock Hotels & Casinos.

Confusion Over Hard Rock's Involvement

The surge on Monday was fueled by news that a consortium, which includes a local partner of U.S.-based Hard Rock Hotels & Casinos, was considering a takeover bid for Star Entertainment. However, this optimism was short-lived. Hours later, Florida-based Hard Rock International clarified that it is not involved in any discussions or negotiations to take control of Star Entertainment.

"Hard Rock International has not authorized the use of the Hard Rock brand in connection with any proposed bid for Star by any third party," stated the company, which owns The Mirage in Las Vegas. This statement cast doubt on the legitimacy of the reported bid and contributed to the sharp decline in Star's share price.

Clarification from Star Entertainment

On Tuesday, Star Entertainment addressed the confusion, stating that it had not received any proposal directly from Hard Rock International. Instead, the proposal came from a consortium that included "Hard Rock Hotels & Resorts (Pacific)," which appears to be distinct from the well-known Hard Rock International brand.

Market Reaction and Stock Performance

The abrupt clarification led to a significant sell-off, with shares of Star Entertainment plunging to their lowest level in weeks. Despite this recent volatility, the stock has managed a 4.9% gain year-to-date as of the last close.

Looking Ahead

The confusion surrounding the potential bid underscores the precarious position of Star Entertainment, a cash-strapped casino operator navigating a challenging market environment. Investors are likely to remain cautious until clearer information emerges regarding any potential takeover or strategic investment.

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