The Star Entertainment Group has withdrawn its Crown Resorts merger proposal, citing uncertainty upon the group’s future prospects and a lack of engagement surrounding the offer.
The proposal outlined significant strategic and value accretion benefits for the shareholders of both companies, including estimated cost synergies of between $150m to $200m per annum, and the potential to create significant value from a sale and leaseback (or similar structure) of the enlarged property portfolio.
However, Star reports that it has had “limited engagement” with Crown Resorts following the proposal, and also states that issues raised at Victoria’s Royal Commission into Crown Melbourne has 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.
Subsequently, the group has asserted a focus upon its current growth initiatives, including its multi-billion dollar Queen’s Wharf Brisbane integrated resort which is due to open in late 2022, as well as its Gold Coast masterplan.
In a media statement, the group stated: “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 battle to acquire Crown, which has also seen Blackstone Group put forward acquisitive proposals, comes after the group was deemed unfit to operate the $2.2bn Crown Sydney Hotel Resort following a New South Wales Independent Liquor and Gaming Authority inquiry which cited poor corporate governance, deficient risk-management structures and processes, and a poor corporate culture.
This has seen subsequent investigations launched within the states of Victoria and Western Australia, where the organisation also boasts operations.