Star Entertainment Submits Proposal To Merge With Crown Resorts
Star Entertainment which is the biggest rival to Crown Resorts in Australia announced on May 10 that it has made an official proposal to merge with Crown Resorts. If Crown Resorts decides to accept the merger proposal, it would create a gambling giant in Australia worth $12 billion.
Star Entertainment Merger Proposal
Blackstone Group, the U.S based investment firm upped its bid to acquire Crown Resorts over the weekend. Blackstone had earlier offered to buy out Crown by paying out $11.85 per share but Crown did not accept or reject the offer. Blackstone submitted a new bid over the weekend for $12.35 per share and is waiting on Crown to make a decision.
Star Entertainment also put in an official bid that is better than Blackstone. Star said in its non-binding proposal that they were willing to pay over $14 per share which pushes Crown Resort’s value to over $8.4 billion. The share offer prices from Blackstone and Star Entertainment are a higher than the current share price of Crown Resorts which jumped to over $13 per share after the Star merger news hit the market.
Star has also given Crown Resorts shareholders the option to take $12.50 in cash per share with a max of 25 percent of their share value through this offer.
Crown Resorts is most likely to make a deal soon as former chairman James Packer is keen to exit the casino industry. Crown Resorts and James Packer have had their reputation tarnished after investigations showed that Crown Resorts had allowed money laundering to take place at its casinos. Packer was also shown to have ties to individuals who had connections to the criminal underworld in Asia.
Market Dominance In Australia
Star Entertainment said that a merger with Crown Resorts would create the biggest casino operator in Asia Pacific and also allow them to dominate the gaming market in Australia. This deal would create a monopoly in the Australia market and would require the approval of the Australian Competition and Consumer Commission (ACCC).
The ACCC confirmed that Star Entertainment had already approached them regarding its potential merger with Crown Resorts. The ACCC said that they will wait for an official submission from Star before they commit to a public review process.
Crown Resorts also released a statement to inform shareholders that it did receive a second offer from the Blackstone Group as well as a potential merger offer from Star Entertainment. Crown has informed its shareholders that they do not need to take any action as this point of time until a decision is taken.