Star Entertainment Group has proposed a merger with Crown Resorts to create a $12bn gaming casino giant.
The non-binding proposal offers 2.68 The Star shares per Crown share, which The Star says values Crown shares above $14.
Crown shareholders would also be offered the alternative of $12.50 cash per share, up to a limit of 25 per cent of its shares.
The merger proposal trumps a bid by US private equity firm Blackstone, which was raised over the weekend from $11.85 to $12.35.
The new cash offer puts an $8.4 billion value on Crown.
Both offers are higher than the share price has been since mid-January 2020.
The price crashed in March last year as the pandemic took hold, and as hearings for the Bergin inquiry into Crown Resort’s fitness to hold a casino licence for its new Barangaroo casino on Sydney Harbour confirmed media reporting about links to criminal gangs and rampant money-laundering.
Then, the share price slumped as low as just above $6. It closed on Friday at $12.12.
$12b casino giant
The Star’s chairman, John O’Neill, said the merger would create a $12 billion casino and entertainment company listed on the ASX.
“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,” he said in a statement to shareholders.
“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.”
The Star is also pitching its offer as a way to potentially solve Crown’s regulatory woes, which continue to stop its new casino in Sydney’s harbourside Barangaroo district from commencing gaming operations due to governance problems and money laundering risks.
Crown’s biggest shareholder, James Packer, is keen to exit the business, which may also assist the company in gaining NSW regulatory approvals.
However, Crown now also faces royal commissions investigating its past practices and compliance with gaming and money laundering laws in Victoria and Western Australia.
The Star operates Sydney’s current casino in Pyrmont and also has casino operations in Queensland.
Crown’s board said it had not yet formed a view on the merger proposal or on Blackstone’s increased takeover offer and advised that shareholders did not need to take any action at this stage.
Crown appoints Steve McCann as new CEO
In a busy morning for the company, Crown also announced that it had appointed current Lendlease chief executive Steve McCann as its new CEO and managing director.
Chair Helen Coonan has been doing double-duty as interim chief executive since February.
At that time chief executive Ken Barton resigned as part of a clear-out of directors and executives in the wake of the New South Wales inquiry.
The Bergin Report had been scathing of the performance of many of Crown’s directors and senior managers.
The ACCC has announced it will conduct a public review of the merger proposal to look at the impacts on competition.