A confusing episode of mistaken corporate identity, centered on a possible acquisiton of foundering Australian casino giant Star Entertainment Group, resulted in a quick surge in Star's stock price on Monday. The stock's 20% jump, however, was followed by a steady tumble when an initial news report turned out to be not quite accurate. In the process, Florida's Hard Rock International quickly denied it had any involvement in the situation and threatened possible action against anyone who misrepresented themselves in talks regarding a buyout of Star.
The Australian Financial Review's initial report on the possible sale of Star stirred up a global buzz on most financial news outlets. 'Hard Rock Hotels and Casinos, the Florida entertainment giant, is considering taking control of Star Entertainment with a proposal that would inject more capital into the struggling gaming group,' AFR first reported.
Within hours, however, Hard Rock issued its rushed denial of involvement in any acquisition talks with Star. 'We want to make it clear that Hard Rock International is not involved in, nor has it authorized, any discussions, activities or negotiations on its behalf in connection with a proposed bid for Star,' Hard Rock declared. 'Hard Rock International has similarly not authorized the use of the Hard Rock brand in connection with any proposed bid for Star by any third party.
'Our brand is built on a legacy of integrity, excellence, and a commitment to our guests, partners, and team members worldwide. Any misuse of the Hard Rock name in unauthorized 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.'
Mystery and alleged misrepresentation
A subsequent rehashing of the situation by AFR and other Australian outlets uncovered the source of the false alarm. Star later clarified that the member of the interested buyer's group had presented himself under a variant of Hard Rock's name, as being with 'Hard Rock Hotels & Resorts (Pacific)', which Star officials had 'understood to be a local partner of Hard Rock.'
That member of the investment group indeed had a Hard Rock connection, but just barely. A follow-up from AFR identified the man in the muddle's middle as Patrick Farrugia, a business developer from Brisbane. Farrugia's Hard Rock tie was having been associated with a now-closed Hard Rock Cafe franchise in Surfer's Paradise, a city south of Brisbane.
Inside Asia Gaming, one of the region's more reliable outlets, offered more information. Farrugia, IAG reported, has been using his professed connection to Hard Rock International for 'years', and has already been served with multiple cease-and-desist notices, over his claim of having 'long-standing' and 'confidential' arrangements with the Florida-based gaming company.
Hard Rock's involvement could have brightened Australia's poker future
Alas, that there wasn't some nugget of truth behind Hard Rock's supposed interest. With the demise of most of the poker action at Australia's Crown Melbourne casino, the largest Aussie casino operator in terms of poker has been Star Entertainment, including major series at its Star City Sydney and Star Gold Coast venues. Star's involvement in poker has, though, been uneven, producing both positive and negative tales.
Star also has been involved in the same sort of money-laundering investigations as its rival Crown has in recent years, involving, in both companies' cases, hundreds of millions of dollars in fines. Star's casino-operator's license remains under regulatory review, and an ongoing government inquiry was recently told that the company's current management may never be deemed suitable to run its gaming operations. In that light, a sale of the company to new investors would've helped solve several of Star's ongoing difficulties.
Hard Rock itself has been active in the poker world, with plenty of cash-game and tourney action available at many of its properties. That's especially true in its home state of Florida, where several major poker festivals run at Hard Rock venues each year. Hard Rock fit the bill of a possible white-knight suitor for Star in many ways, which might also have explained how quickly the original AFR story grabbed widespread interest and triggered a short-lived share-price bubble.
