👉 Background: Since 2021, Star Entertainment has been in major crisis mode after it was exposed for its lack of compliance with anti-money laundering laws. This led to the Star casinos copping major fines as well as the Sydney and Brisbane casinos temporarily losing their licences.

👉 What happened: Now, Star has revealed that it has received interest for a potential takeover. It was rumoured that Hard Rock International, the US hospitality giant was one of those interested parties. Next minute: Star’s share price jumped 20%.

👉 What else: But Hard Rock has denied these rumours and warned they’ve got nothing to do with Star. Either way, it seems like other purchasers are eyeing Star as a potential takeover - especially given its net tangible assets are currently worth more than its market value.

What's the key learning?

💡Net tangible assets is the value of all the physical or tangible assets in a business less any of its liabilities.

💡In theory, a company's value should at least be the value of its tangible assets. But in Star’s case, its net tangible assets were valued $0.89 per share in its 2023 results while its share price is currently sitting at ~$0.50. So Star Entertainment is actually trading at a discount to its NTA.

💡While that’s bad news for Star, external parties are eyeing those assets like hyenas. It's a tempting opportunity to lap up millions of dollars worth of assets for potentially a fraction of what they’re worth.