Australia’s two dominant casino operators, Star Entertainment Group and Crown Resorts, could soon come together as one after star submitted a merger proposal early Monday morning.
The proposal, which values Crown at more than $10 billion, would either comprise a share exchange between shareholders of each company or see cash in the amount of $12.50 per share paid for the new merged entity to acquire up to 25% in Crown’s issued share capital.
There is no guarantee the merger with Crown will go ahead, however Star believes it is better positioned to take advantage of Crown’s current regulatory woes than the two American investment firms to have expressed an interest in either a partial or full acquisition of the troubled casino giant.
In particular, Star believes that its relationship with regulators in NSW and Queensland, where it operates The Star Sydney, The Star Gold Coast and Treasury Brisbane, will allow it to gain regulatory approval for such a merger faster and less painfully than its foreign rivals.
“A merger of The Star and Crown would result in significant scale and diversification and unlock an estimated AU$2 billion in net value from synergies,” said Star Chairman John O’Neill.
“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.”
Star said that if the merger does take place, the new entity – which would be 59%-owned by Crown shareholders and 41% by Star – may sell off some of its assets in a sale and leaseback deal similar to those employed by MGM Resorts in Las Vegas. MGM last year sold its Bellagio, MGM Grand and Mandalay Bay properties but still runs the casinos and some other non-gaming operations.
It is not known what, if any, impact the merger would have on utilization of poker brands such as Crown’s Aussie Millions. A rumour had been circulating earlier this year that Star was interested in buying the Aussie Millions brand but Star denied any interest when asked by PokerMedia Australia.
Star is currently home to the WSOP Circuit Event at The Star Sydney and the World Poker Tour at The Star Gold Coast.
WPTDeepStacks Gold Coast is set to make its debut this month from 21 to 31 May.
Crown, which was recently found unsuitable to retain its NSW casino license until it can demonstrate significant changes in its board makeup and internal compliance systems, said it has not yet formed a view on the merits of Star’s proposal and will commence an assessment process on its merits.