Star Entertainment Group Proposes Merger with Crown Resorts for A$120 Billion

The Star Entertainment Group has put forward a plan to combine forces with Crown Resorts for a staggering A$120 billion. Meanwhile, the Blackstone Group has also upped their offer.

Australia’s Star Entertainment Group, a land-based operator, has made a fresh proposal to join forces with its competitor, Crown Resorts. This union would create a combined entity valued at roughly A$120 billion (£67.1 billion/€77.6 billion/$94.3 billion). At the same time, the private equity giant, Blackstone Group, has also presented a revised bid for Crown.

The non-binding proposal sets a share exchange ratio of 2.68 Star shares for every Crown share, putting a price tag of $14 per share on Crown shares. Crown shareholders will also have the option of receiving a cash alternative of $12.50 per share, up to 25% of Crown’s issued share capital.

This proposal means that the merged entity would be 59% owned by Crown shareholders and 41% owned by Star shareholders.

Star Entertainment stated that the merger was a “highly appealing value proposition” for all shareholders, adding that the combined operation would become a national leader in tourism and entertainment in Australia.

If the merger goes through, the group anticipates achieving cost savings of A$150 million to A$200 million annually, with an estimated net value of A$2 billion.

Star Entertainment Chairman John O’Neill added that the entire operation would be worth approximately A$120 billion.

The joining of Star Entertainment Group and Crown Resorts is projected to produce roughly two billion Australian dollars in combined benefits and establish a unified resort operator with top-tier hotels, encompassing the most appealing and heavily populated tourist centers across four Australian states.

The combined entity will possess strong investment allure and emerge as one of the largest and most attractive integrated resort operators within the Asia-Pacific region.

Star Entertainment Group has indicated its intention to finalize the required due diligence procedures and sign a binding merger agreement and definitive debt financing documents within the next three months.

During the due diligence phase, Star Entertainment Group intends to engage with a diverse range of investors regarding potential sales and leasebacks of the expanded property portfolio.

This proposal follows Crown’s receipt of an amended acquisition proposal from Blackstone Group.

Blackstone Group submitted an offer in March to acquire the remaining shares of Crown for eight billion and two Australian cents, subsequent to their acquisition of a 9.99% stake in Crown in April 2020 through the purchase of MGM’s shares.

The revised offer stands at twelve dollars and thirty-five Australian cents per Crown share in cash, representing a four percent premium over the twelve dollars and eighty-five Australian cents per share offer made in March, but falling short of the fourteen dollar valuation and twelve dollars and fifty Australian cents cash alternative proposed by Star Entertainment Group.

The Blackstone Group recently altered its acquisition proposal, indicating that the transaction would be canceled if either of Crown’s current two permits were withdrawn, or if its New South Wales license was not granted. Other stipulations of the initial offer remain unchanged.

An inquiry in New South Wales determined Crown to be “inappropriate” to operate a gambling establishment in Sydney’s Barangaroo district.

The Crown board will assess the proposition from Star Entertainment Group and the revised proposal from Blackstone Group, and has stated that it cannot assure that any proposition will result in a deal, before making further pronouncements.

In the meantime, Crown also declared the appointment of Steve McCann as its new Chief Executive Officer and Managing Director.

McCann will formally join Crown on June 1, contingent upon certain integrity and regulatory authorizations.

Sign up for the iGaming news newsletter.