Weekend Gold Coast Bulletin
Casino merger bid dead in water
THE Star Entertainment Group has pulled the pin on $12bn plans to merge its operations with beleaguered Crown Resorts, saying uncertainty over Royal Commission findings meant it was unable to proceed.
Shares in Crown have been sliding since the closing submissions of the Royal Commission, in which Adrian Finanzio SC delivered a blistering argument which cast doubt on the operator’s suitability to hold a licence in Victoria.
In an announcement to the ASX on Friday, The Star said it had “withdrawn its conditional, non-binding, indicative proposal announced on 10 May, 2021 to merge our businesses”.
The Star said while it continued to see “significant strategic and value” benefits and cost savings of up to $150m$200m, the proposal had failed to gain any traction with Crown.
“To date, The Star has had limited engagement with Crown on its proposal,” the announcement said.
“Also, issues raised at Victoria’s Royal Commission into Crown Melbourne have the potential to materially impact the value of Crown, including whether it retains the licence to operate its Melbourne casino or the conditions under which its licence is retained.
“We continue to believe substantial benefits could be unlocked by a merger. However, the uncertainty surrounding Crown is such that The Star is unable to continue at the present time with its Proposal in the form as announced on 10 May, 2021.
“The Star remains open to exploring potential value enhancing opportunities with Crown. The Star will continue to closely monitor the Victorian Royal Commission and Perth Casino Royal Commission, with final findings expected later this year.”
The Star had touted the proposal as a game-changer for the sector, saying a merged company would become the “BHP of hospitality and gaming”, enabling the Gold Coast to tap into an expanded marketplace including capital cities Melbourne and Perth.
Star Entertainment Group CEO Matt Bekier had said Star’s indicative proposal would create a company “bigger than Qantas” with 30,000 staff if approved.
The merger had been opposed by independent federal MP Andrew Wilkie and former Victorian premier Jeff Kennett, who objected to one company effectively controlling Australia’s casino market, with a merged Star/Crown operating all casinos on Australian’s east coast and at Burswood in Perth.
Austrac has began an investigation into Star for potential breaches of the Anti-Money Laundering and Counter Terrorism Financing Act, which carries maximum penalties of $22m per breach.
The Star will report its financial results for FY2021 on August 19.