Star Entertainment Drops Crown Resorts Merger Proposal
Crown Resorts decided to reject an acquisition offer from the U.S. based Blackstone Group earlier this year and one of the reasons for that rejection was because it had a better merger offer from rival Star Entertainment.
Star Entertainment Drops Merger Proposal
Star Entertainment sent in a proposal in May 2021 to merger with the controversial Crown Resorts. If the merger had to go through, it would have created a $12 billion gaming giant that would have had a monopoly over the Australian casino market. This merger will not take place as of now as Star Entertainment announced that they had decided to withdraw their merger proposal.
Star Entertainment said that the main reason they decided to withdraw the merger offer was due to the recent findings by the Royal Commission (RC) of Victoria. The RC carried out a detailed review over the activities of Crown Melbourne – the flagship casino of Crown Resorts.
The findings were rather damaging as it showed that Crown Resorts had deliberately underreported its taxes for nearly a decade and had defrauded the Victorian government of over $200 million in taxes. Crown had also admitted to allowing money laundering to take place at its premises and having ties to individuals connected to the Asian syndicate.
When Crown Resorts learned that there was a strong possibility that it could lose its Crown Melbourne license, the operator sent a letter to the Victorian government warning them that over 12,000 employees would be laid off and its outstanding loans would be defaulted. This indirect threat to the Victorian government further tarnished Crown’s reputation.
Star Entertainment decided that there is too much risk and bad publicity currently associated with the brand for it to proceed with a merger.
Crown Resorts Might Get A Lifeline
While on many fronts it looks like it might be the end of the road for Crown Melbourne, it appears that the Victorian government might give Crown Resorts a lifeline. There are talks that the government may not immediately cancel its casino license but instead give it a deferred suspension period for around 18 months.
This 18 month conditional extension will safeguard the jobs of 12,000 Australians and also protect hundreds of third party vendors who do business with Crown Melbourne. Crown Resorts will have 18 months to make significant changes, clean up its act and then reapply for a casino license.