Star Entertainment share price dives 10% on Hard Rock update

Takeover rumours have been swirling around ASX 200 casino operator Star Entertainment.

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The Star Entertainment Group Ltd (ASX: SGR) share price is taking a tumble today.

Shares in the S&P/ASX 200 Index (ASX: XJO) casino operator were down 10.1% in earlier trade at 48.5 cents. After some likely bargain hunting, shares have recouped much of those losses, currently trading for 52.5 cents apiece, down 2.8%.

For some context, the ASX 200 is down 0.2% at this same time.

This comes after another update on media speculations surrounding potential takeover discussions with Hard Rock International.

Hard Rock responds

As the Motley Fool reported yesterday, Star had confirmed media rumours saying it has received interest from "a number of external parties regarding potential transactions".

Management noted that they were not yet in "substantive discussions". But that didn't stop the Star Entertainment share price from soaring after coming out of the morning trading halt, ending the day up 20.0%.

The big rally may have been driven by the rumours of Hard Rock's potential interest in the stock.

Yesterday, The Australian Financial Review cited sources close to Star had indicated Hard Rock Hotels and Casinos was among those external parties potentially interested in acquiring the embattled casino operator.

Overnight, the United States-based global chain denied that in no uncertain terms.

According to Hard Rock:

Any misuse of the Hard Rock name in unauthorised business dealings is taken very seriously. We are currently investigating this matter and will pursue all necessary legal actions to protect our brand and reputation.

Star Entertainment released an update in response to the media speculation during trading hours yesterday.

"The Star confirms that it has not received a proposal directly from Hard Rock Hotels and Casinos (Hard Rock)," the company noted.

Star continued:

However, the company has received inbound interest from a number of other external parties regarding potential transactions including a consortium of investors which includes the entity Hard Rock Hotels & Resorts (Pacific), which The Star understands is a local partner of Hard Rock.

The nature of the interest to date has been confidential, unsolicited, preliminary and non-binding. At this stage, none of the approaches has resulted in substantive discussions.

To clarify its position following Hard Rock's litigation threats, Star Entertainment followed up with another statement this morning:

The company today notes the statement issued by Hard Rock International which clarifies that Hard Rock International is not involved in, nor has it authorised, any discussions, activities or negotiations on its behalf in connection with a proposal for The Star.

Star Entertainment share price snapshot

The Star Entertainment share price is down 55% over the past full year. But shares in the ASX 200 casino operator look to have found support over the past months, with shares down just over 1% in 2024.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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