Casino Merger Proposal By Star Sees Crown Bidding War Intensifying
The stock merger proposal by the rival Star Entertainment Group Ltd led to a bidding war with Crown Resorts Ltd.
Star group stated its aim of achieving a market valuation of 12 billion Australian dollars that is roughly 9.4 billion US dollars.
This is through its cost curtailing plans, selling and leasing out properties, thereby creating an Australian gaming and hospitality behemoth for its group.
This saw an immediate appraisal in the offering by Blackstone, a private U.S. equity firm. They raised their offer to Crown, estimating at 8.36 billion Australian dollars, a 4 percent rise from its initial offering. The Crown was evaluating both proposals.
Fresh probes have been instigated against the company in lieu of several money laundering cases at the properties located both in Melbourne and Perth. Thus, ruling out the company as a proponent through its inquiry. One that cited them to be unfit to run a brand-new casino in Sydney.
The Crown is in omnishambles from the heavy scrutinization by the gaming watchdogs but is clear on one pretext: its appeal to its suitors. The company has a long envious listing of properties. It runs licensed casinos across Melbourne, Perth, Western Australia, and Victoria, as well as the Sydney waterfront resort with a valuation of 2.2 billion Australian dollars.
The earning seems to have taken a dent with the pandemic hitting hard and the restrictions to battle Covid-19. However, the company is hopeful to emerge back stronger next year through its earnings.
One of the largest shareholders of Crown, James Packer, a billionaire, failed in his desperate attempt of selling his stake. Thus, offering a variable path ahead in the run-up to the future of the Crown.
Packer faced heavy criticism in a regulatory report released in February. One that stated his influence on Crown and led him to a sedentary lifestyle battling mental health issues.
A potential break would have been the bid offered by the Blackstone. An offer that entitles Packer to swap his 37 percent stake in Crown and to invest the same for a merged entity by accepting the Star’s proposal.
This was followed by Oaktree Capital Management LP offering to purchase the shares of Packer in full, thus giving him a clean exit path.
The proposal by Star opens the door for a long-term chance for the capital market. One that would cease to exist if an American private equity firm buys Crown.
Matt Bekier, one of the chief executive officers of Star, highlighted in an interview about the proposal. He also cleared the air about the standings of the management team that is still in a good position for pulling off the deal. This is by abiding by all the necessitated jurisdictions and at a comparatively lower risk.