In Australia and The Star Entertainment Group Limited has reportedly floated a non-binding proposal that could see it merge with rival casino operator Crown Resorts Limited to create an entity that would run seven properties across four states.
According to a report from GGRAsia, the consolidation bid from the Brisbane-headquartered operator values individual shares in Crown Resorts Limited at about $11 and proposes offering backers in its biggest competitor 2.68 of its own interests for every stake it receives. The source detailed that the proposition is also providing such shareholders with the alternative of receiving slightly over $9.84 in cash for up to 25% of their investments.
Regulatory rebuke:
The Star Entertainment Group Limited is reportedly responsible for The Star Gold Coast, Treasury Brisbane and The Star Sydney properties and is currently spending roughly $2.3 billion so as to bring its Queen’s Wharf Brisbane development to a 23-acre plot of land in central Brisbane. For its part and Melbourne-headquartered Crown Resorts Limited purportedly runs the Crown Melbourne and Crown Perth venues but was recently prevented from bringing gambling to its new Crown Sydney property after officials in New South Wales ruled that the company may have been complicit in a slew of money laundering offenses tied to its use of foreign junket firms.
Attractive argument:
Sydney-listed The Star Entertainment Group Limited reportedly used an official Monday filing to proclaim that its merger with Crown Resorts Limited could be ‘highly accretive’ for both enterprises and deliver annual cost savings worth as much as $157 million. The operator furthermore purportedly declared that the suggested amalgamation would ‘unlock significant value from a sale and leaseback of the enlarged property portfolio’ and create an entity valued in the region of $9.4 billion.
Rival runners:
However, The Star Entertainment Group Limited is reportedly facing stiff competition in its quest to acquire Crown Resorts Limited via the world’s largest private equity firm, The Blackstone Group Incorporated. This American concern purportedly lodged a $6.2 billion takeover offer in March before unexpectedly raising the stakes over the weekend courtesy of a revised $6.6 billion proposition.
American investment equity giant Oaktree Capital Management LP is moreover reportedly involved in the race for Crown Resorts Limited and last month offered the casino operator’s largest shareholder, the Consolidated Press Holdings Proprietary Limited vehicle of company founder James Packer, approximately $2.3 billion in cash for its 37% shareholding.
Endorsement ease:
Local financial services giant JP Morgan Securities Australia Limited reportedly responded to this latest offer by pronouncing that the Australian Competition and Consumer Commission would not represent a ‘significant hurdle’ to the prospects of The Star Entertainment Group Limited acquiring Crown Resorts Limited. The banking expert did nevertheless purportedly forecast that ‘regulatory approvals’ could slow the process and ‘drive timeline to completion.’
Reportedly read a statement from JP Morgan Securities Australia Limited…
“Once the merger is approved, The Star Entertainment Group Limited believes synergies can be achieved quickly. Bulk of the synergies will be captured within twelve months.”