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Star’s bid to merge with Crown would create a $12 billion casino powerhouse

After months of informal talks, Star Entertainment Group has put a merger proposal to Crown Resorts, which would see the two combine to form a near $12 billion entity.

The proposal comes as a counter to US private equity giant Blackstone’s recent takeover bid.

Blackstone made an unsolicited, non-binding offer of $11.85 a share. With just over 677 million shares in the company, Blackstone’s initial offer price valued Crown at slightly more than $8 billion.

Blackstone has upped its bid from $11.85 to $12.35, however Star’s proposal is still better.

Crown Resorts released a statement on Monday saying it has received Star’s proposal  to merge by way of a scheme of arrangement comprising of a share exchange or alternative cash offer.

According to Star’s chairman John O’Neill, “a merger of The Star and Crown would result in significant scale and diversification and unlock an estimated $2 billion in net value from synergies.

“With a portfolio of world-class properties across four states in Australia’s most attractive and populated catchment areas and tourism hubs, the combined group would be a compelling investment proposition and one of the largest and most attractive integrated resort operators in the Asia Pacific region.”

If the merger is to go ahead, it would create a company that would have a casino in Melbourne, Perth, Brisbane and the Gold Coast. There would be two casinos in Sydney.

It could also help solve Crown’s regulatory woes and free up operations in Sydney. Should a merger occur, James Packer would exit which would help to put NSW regulatory approvals back in its favour.

Approval would also have to be sought from the Australian Competition and Consumer Commission (ACCC).

"Star Entertainment Group has approached the ACCC regarding its indicative proposal to merge with Crown Resorts," said a spokesperson from the competition regulator.

"We will wait for a submission and commence a public review after that, if the matter progresses."

Crown is yet to form a view on either Star’s proposal or Blackstone’s increased offer.

If the merger goes ahead, Crown has said the new board would “initially comprise the current directors of each of Crown and Star.”



Irit Jackson, 10th May 2021