Star Entertainment makes A$9 billion all-stock play for Crown Resorts

Australian casino operator Star Entertainment Group yesterday proposed an all-stock buyout of larger rival Crown Resorts Ltd that it valued at A$9 billion (RM29 billion), taking on two private equity giants for control of the troubled company.

Three months after Crown was declared unfit for a gambling licence at its new Sydney resort tower, Star said the share-swap takeover approach would create “one of the largest and most attractive integrated resort operators in the Asia Pacific region”.

The move presents Crown shareholders with a third option after buyout giant Blackstone Group earlier upped its all-cash indicative bid to A$8.4 billion, while Oaktree Capital Group has proposed to bankroll a A$3 billion buyback of Crown’s founder’s stake, removing a regulatory concern.

Star’s approach reflects the intense interest in Crown, which has prized tourism and real estate assets in three of Australia’s four biggest cities but whose profits and share price have been hit by coronavirus-related border closures and regulatory woes.

If the deal goes ahead, Star said it would pursue a sale and leaseback of the companies’ combined property portfolio covering dozens of hectares of soughtafter waterfront land, generating “significant value”.

Shares of both companies touched their highest intraday levels since before the pandemic, giving them a combined market capitalisation of A$13 billion by the close, as investors warmed to the longer term benefits that Star said were built into its proposal.

Star’s proposal “has the synergies, and then the sale-and-leaseback provides the firepower to do buybacks to realise full value for both sets of shareholders”, said John Ayoub, portfolio manager of Wilson Asset Management which has shares in both.

Crown said yesterday said it had appointed Steve McCann, the head of property developer Lendlease Group, as CEO. Crown said it was considering the Star proposal, along with the others.

While the Star proposal would not require clearance from foreign takeover regulators, as Blackstone’s would, it may attract antitrust scrutiny since it would create a single gambling behemoth in Australia without a competitor. – Reuters