Australia’s Star Entertainment proposes AUS$12bn to buy Crown Resorts

Australian casino operator Star Entertainment Group has submitted a non-binding proposal to merge with its rival Crown Resorts Ltd, by offering 2.68 of its shares for each Crown share and create a company worth approximately AUS$12.00bn (£6.71bn).

The proposal

The proposal by Star Entertainment Group (Star) was announced this morning and involves a merger of the two groups to create a single casino operator which would have operations in most major capital cities.

The non-binding proposal involves Crown investors being granted 2.68 Star shares for each Crown share, evaluated at $14 each. The shareholders would also be offered a cash alternative of AUS$12.50 per share, up to a maximum of 25% of Crown’s issued share capital.

Should the merger go through, the merged entity would be owned by 59% for Crown shareholders and 41% for Star shareholders, and the board would be comprised of directors of each of the companies.

Star estimates that the merger would result in indicative cost synergies of between AUS$150m and AUS$200m per annum, with an estimated net value of $2.0bn.

Leader in Australia and the region

Commenting on the significance of this share-swap takeover, Star’s chairman John O’Neill said that “the combined operation would create a national tourism and entertainment leader in Australia” and “one of the largest and most attractive integrated resort operators in the Asia Pacific region.”

Faced with the potential merge of Australia’s two biggest casino groups, the Australian Competition and Consumer Commission (ACCC) revealed it will hold a public review of a proposal and look at the impacts on competition if gambling companies are allowed to merge, reported The Guardian.

A bidding war

A bidding war could erupt as the interest in Crown intensifies.

The Star offer is the third option presented to Crown shareholders, after Oaktree Capital Group and private equity giant Blackstone Group, which has recently submitted an enhanced offer.

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