Star accepts AU$300 million takeover bid from Bally’s
The deal, announced today (7 April) in an ASX filing, is the culmination of months of uncertainty for Star. After negotiations for a massive AU$940 million refinancing deal with Salter Brothers fell through last week, it became likely that Bally’s was the only bidder left. The US operator, which has signalled interest in the acquisition since at least February, tendered an offer on 10 March.
Under terms of the deal, Bally’s will supply Star with an AU$100 million injection by Wednesday without need for shareholder approval. That first tranche will convert to approximately 15% of shares, as well as AU$66.6 million in subordinated non-convertible debt.
The remaining AU$200 million will be paid out in a second tranche. That portion requires shareholder and regulatory approvals and could be split into AU$100 halves at the receipt of each, but no later than 7 October if regulatory approvals are still pending.
All told, Bally’s could control up to 56.7% of Star’s shares, more than the 50.1% outlined in the original bid. The notes mature on 2 July 2029 with an interest rate of 9%. Bally’s paid a conversion rate of eight cents per share, down from Star’s existing price of 11 cents, although its trading has been halted for over a month after failing to submit its latest financial report.
Kim: Star, Bally’s to have “brighter future together”
Star is planning to hold a shareholder meeting in June, the company said. In its filing, Star indicated that its board “intends to unanimously recommend that The Star shareholders vote in favour of the transaction”.
Bally’s chairman Soo Kim commented on the deal in a press release.
“This transaction provides Bally’s the opportunity to infuse The Star with what it needs to regain its position as Australia’s preeminent gaming destination,” he said. “And it allows The Star shareholders to share in what we confidently believe will be a brighter future together.”
Bally’s president George Papanier added that the company is “excited to bring our reputation and operating expertise” to the Australian market. Bally’s operates 19 casinos across 11 US states and late last year purchased the former Aspers Casino in Newcastle, UK. Its foray into Australia won’t be easy, but Papanier asserted his team is “up for the challenge”.
Mathieson could provide up to AU$100 million
The terms of the deal could change slightly, depending on Star’s largest individual shareholder, Bruce Mathieson. The billionaire pub and poker machine magnate had previously lobbied for the Bally’s deal. The figure offered at that time, notably, was AU$50 million.
Star said Monday that it is now negotiating with Mathieson to potentially supply up to AU$100 million of the financing. If he should agree, Bally’s would decrease its commitment by a like amount to AU$200 million. The term sheet for the deal is laden with contingencies depending on Mathieson’s capital input.
Mathieson currently owns 10% of Star’s shares but recently indicated that he had already received requisite approval to increase that stake. Regardless, both he and Kim will be installed as board observers, per the term sheet.
Wish upon a star?
The deal involves two companies beset with questions and/or problems. In Star’s case, the last few years have been an epic, multi-year freefall plagued by regulatory scandals, massive penalties and staff exodus. At its peak in the late 2010s, Star’s stock traded above AU$5. It now sits halted at 11 cents. Both of the company’s state casino licences are currently in jeopardy and have been for some time.
In New South Wales (NSW), its flagship Star Sydney property has twice been found unsuitable in regulatory inquiries, most recently in October. The casino now has until 30 September to show that it has returned to suitability and this is likely complicated by the Bally’s transfer of ownership. In Victoria, Star Gold Coast was also deemed unsuitable for licensure in 2022. A planned 90-day suspension of that property’s licence has also been pushed to 30 September.
Both casinos remain under state supervision. On the federal level, Star is still under investigation from Australian financial crimes watchdog AUSTRAC and a substantial fine is expected in the near future.
Finally, Star last month exited perhaps its most promising venture, the multibillion-dollar Queen’s Wharf Brisbane development. It sold its 50% stake in the joint venture for AU$53 million in efforts to shrug off debt and other commitments to the project. As part of the transaction, Star was also able to consolidate full ownership of its Gold Coast property. However, Bally’s did not support that deal and wished to keep all of its assets together.
Queen’s Wharf is only mentioned once in the term sheet, to say that Bally’s “acknowledges [Star’s] existing agreement to exit Destination Brisbane Consortium and consolidate The Star’s position at the Gold Coast announced on 7 March 2025”.
Bally’s plate keeps growing
For Bally’s, the takeover of Star is another item on a growing to-do list.
In addition to its existing properties, the company is stretched thin with projects across the US. It is building its flagship casino in Chicago thanks to massive financing help from Gaming and Leisure Properties (GLPI); it is developing a new casino-resort on the site of the former Tropicana on the Las Vegas Strip, also with help from GLPI; and it is bidding for one of three available downstate New York casino licences with a resort proposal on its Bally Links golf course in the Bronx.
And perhaps most notably, Bally’s itself was bought out last year by Standard General, a hedge fund owned by chairman Soo Kim. Since the start of 2024, the company has faced scrutiny for hiccups with all of its projects, but it continues to press on. The fascination with the Australian market is perhaps the riskiest move yet, given the problems facing Star coupled with Bally’s inexperience in the region.
Despite this, Kim has been clear that Bally’s views Star as a distressed asset with underlying value.
“I just think that it is very clearly an operating issue and these operating issues are familiar to us because, again, when we step into a situation, others before have tried and said ‘We can’t make it work,'” he told iGB at the NEXT Summit in New York City in mid-March. “We’re
looking forward to the opportunity to make it work.”