In Australia and The Star Entertainment Group Limited has reportedly withdrawn the offer that was to have seen it purchase rival casino operator Crown Resorts Limited owing to uncertainty regarding the safety of the target’s Victoria gambling license.
According to a report from the Australian Broadcasting Corporation, the non-binding proposition initially lodged in May was to have seen the Brisbane-headquartered buyer hand 2.68 of its own shares over to investors in Crown Resorts Limited for every stake it received in kind. The source detailed that this indicative scheme contained a clause that would have also permitted such backers to offload up to 25% of their shareholding at an individual stock price of slightly over $9.84.
The state-run broadcaster reported that this alliance was to have immediately created the largest casino operator in Australia with six gambling-friendly properties spread across four states and additionally encompassing the Queen’s Wharf Brisbane development The Star Entertainment Group Limited is building on a 23-acre plot of land in central Brisbane. The combined entity worth approximately $8.8 billion would have moreover purportedly held the keys to the new Crown Sydney venue that has been working towards regaining its certification from the New South Wales Independent Liquor and Gaming Authority.
However, the source reported that Sydney-listed The Star Entertainment Group Limited used an official filing earlier today to declare that it had pulled the plug on the proposed amalgamation due to ‘issues raised at Victoria’s royal commission into Crown Melbourne.’ This official body is purportedly investigating allegations that Crown Resorts Limited’s flagship 1,604-room property had been engaging in illegal activities such as money laundering that could well result in either the suspension or complete revocation of its local gambling license.
Reportedly read the filing from The Star Entertainment Group Limited…
“To date, The Star Entertainment Group Limited has had limited engagement with Crown Resorts Limited on its proposal. Also, issues raised at Victoria’s royal commission into Crown Melbourne have the potential to materially impact the value of Crown Resorts Limited including whether it retains the licence to operate its Melbourne casino or the conditions under which its licence is retained.”
The Star Entertainment Group Limited, which is furthermore responsible for The Star Gold Coast, Treasury Brisbane and The Star Sydney properties, reportedly went on to assert that it still believes ‘substantial benefits could be unlocked by a merger’ and intends to remain open ‘to exploring potential value-enhancing opportunities with Crown Resorts Limited’. The operator purportedly finished by proclaiming that it will now ‘continue to closely monitor’ the Victoria examination as well as the analogous probe being conducted in Western Australia as both investigations work towards releasing their findings later in the year.
For its part and Crown Resorts Limited, which formally rejected an about $6.2 billion takeover offer from American private equity management firm The Blackstone Group Incorporated in May, used a subsequent short filing (pdf) to acknowledge The Star Entertainment Group Limited’s reversal and proclaim that it ‘remains willing to engage’ in future discussions regarding any such takeover offers.
Crown Resorts Limited’s filing read…
“The board is committed to maximizing value for all shareholders and will carefully consider any proposal that is consistent with this objective. Crown Resorts Limited is continuing to implement its reform agenda and will also continue to fully co-operate in relation to the various regulatory processes.”