Crown Resorts and Star Entertainment Group would combine to form a near $12bn casino resorts giant under a merger proposal put by Star to the James Packer-backed Crown.
In a statement released on Monday, Crown Resorts said it had received an indicative proposal from Star to merge by way of a scheme of arrangement comprising of a share exchange or alternative cash offer.
The Star’s chairman, John O’Neill, said bringing together The Star and Crown would create an estimated $12 billion ASX-listed national tourism and entertainment leader.
“A merger of The Star and Crown would result in significant scale and diversification and unlock an estimated $2 billion in net value from synergies.
“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.”
It comes as US private equity giant Blackstone boosted its $8 billion takeover proposal for Crown Resorts in a bid to end the seven week stalemate over its initial approach for the company.
Star’s share exchange option would see each Crown Resorts shareholder receive 2.68 Star shares for each Crown share.
Crown Resorts said the ratio reflects the ratio implied by the three-month volume-weighted average share exchange ratio to 19 March 2021, the last trading day prior to the announcement of the original Blackstone acquisition proposal of $11.85 per share.
Star shares last traded at $3.91 while Crown shares last traded at $12.12 per share.
The cash alternative offers Crown shareholders $12.50 per unit, subject to a cap
equal to 25 per cent of Crown’s total shares on issue.
If the cash alternative is adopted, the ownership of the merged entity would be comprised 59 per cent of Crown shareholders and 41 per cent for Star shareholders.
Crown said if the merger goes ahead the new board would “initially comprise the current directors of each of Crown and Star.”
The offer is subject to conditions such as Crown and Star shareholder approval, as well as approval of the ACCC and State casino regulators.
An agreement would also have to be reached with James Packer’s holding company Consolidated Press Holdings and the relevant gaming authorities if his shareholding post-merger remains above 10 per cent.
Crown Resorts also said on Monday that Lendlease CEO and managing director Steve McCann will become new CEO of Crown Resorts from June 1, subject to regulatory approvals.