Australia: Iris Capital moves to acquire Reef Casino Trust in $116 million deal

Reef Casino Trust, operator of The Reef Hotel Casino in Cairns, Australia, has entered into a formal agreement that could see it fully acquired by Iris Capital for approximately AU$177 million (US$116 million). The move follows months of discussions and competing interests in the property.

The agreement, described as an off-market cash takeover bid, was announced on Monday in a filing with the Australian Securities Exchange. Under the terms, Iris Cairns Property, part of the Sydney-based Iris Capital group, will seek to acquire all ordinary units in Reef Casino Trust (RCT).

RCT’s independent board committee and directors have unanimously recommended that unitholders accept the offer, provided an independent expert finds the deal fair and reasonable and no superior proposals materialize.

In a statement, Wendy Morris, chair of the independent board committee, said the committee was “pleased to have reached agreement with Iris in relation to a transaction that will deliver value to unitholders,” adding that the offer represents “a compelling premium to the recent and historical market price of RCT units.”

The takeover offer of just over AU$3.55 ($2.32) per unit values the trust at a 17.7% premium over its closing price on July 11, and a 30% premium over the closing price on February 25, the last trading day before Iris’s initial approach became public.

RCT’s largest shareholders, global hotel operator Accor and Austria’s Casinos Austria International, which together hold more than 70% of RCT’s shares, have indicated their support for the offer in the absence of a better deal.

The acquisition remains subject to key regulatory conditions, including casino and liquor licensing approvals and compliance with RCT’s Foundation Agreement with the Queensland government.

A bidder statement outlining Iris’s offer is expected to be sent to RCT unitholders between September 10 and 12, with RCT planning to issue its formal recommendation by September 29. In the meantime, as per the agreement’s terms, RCT has ended discussions with any other parties regarding potential competing bids.

This latest development comes after Iris first made a confidential, non-binding proposal to acquire RCT in February. In May, RCT disclosed it had received an additional takeover approach from the Morris Group, though those discussions were described as confidential and incomplete.

Iris Capital, led by Sydney businessman Sam Arnaout, operates two casinos in Canberra and Alice Springs, along with a portfolio of more than 60 hotels across Australia. If completed, the acquisition would expand Iris’s casino footprint further into Queensland.