The CEOs of Australia’s leading casino and integrated resort operators, Crown Resorts and Star Entertainment Group, are said to have met to discuss in detail a proposal to bring the two companies together by merger.
According to a report by the Australian Financial Review, Star CEO Matt Bekier met with recently appointed Crown Resorts boss Steve McCann last week to walk through some of the finer details of the proposal put forward by Star in early May. McCann took over as Crown CEO on 1 June following the departure of Ken Barton in the wake of the damning Bergin Report into Crown’s suitability to hold a NSW casino license.
As previously reported by IAG, if accepted and fully taken up the offer would result in pro forma ownership of a newly merged entity of 59% for Crown shareholders and 41% for Star shareholders.
Monday’s AFR report says Bekier’s pitch to McCann centered around an estimated AU$150 million to AU$200 million in annual cost savings from a potential sale and leaseback plan for some of the two companies’ properties in Melbourne, Sydney, the Gold Coast and Brisbane.
Star’s proposal is one of a number of M&A proposals currently on the table for Crown, including an AU$3.1 billion offer from American global asset management firm Oaktree Capital Management LP to acquire the 37% stake in Crown currently held by James Packer’s Consolidated Press Holdings. Crown has already knocked back a takeover bid from American multinational private equity and hedge fund giant The Blackstone Group, claiming its offer undervalues its assets and future earnings power.
The offers come with Crown in the midst of two concurrent Royal Commissions into its suitability in Victoria and Western Australia, while negotiations are ongoing with regulators in NSW in the company’s bid to reach suitability and launch casino operations at its AU$2.2 billion Crown Sydney development.
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