Star Ent withdraws proposed merger offer to Crown Resorts

Australian casino operator Star Entertainment Group Ltd said in a filing Friday it had stepped down a merger offer with a competitor in the controlled market Crown Resorts Ltd.

The deal, proposed in early May, valued Crown Resorts shares at over AUD 14.00 (US $ 10.31) apiece, according to Star Entertainment’s announcement at the time.

Shares of Crown Resorts closed at AUD 10,250 each at the end of Thursday’s session, according to the Australian Securities Exchange, where the two companies are listed.

“We continue to believe that substantial benefits could be unlocked by a merger,” Star Entertainment said Friday.

But he added “the uncertainty surrounding the Crown [Resorts] is such that the star [Entertainment Group] is unable to proceed at this time with its proposal in the form announced on May 10, 2021.

Crown Resorts is currently the subject of public inquiries in the states of Victoria and Western Australia into its business practices at its Crown Melbourne and Crown Perth casino complexes, respectively.

In February, Crown Resorts was found by a regulatory investigation in New South Wales, as unfit to operate a casino at the company’s new Crown Sydney property in Barangaroo, Sydney.

“To this day, the star [Entertainment Group] had limited engagement with the Crown [Resorts] on his proposal, ”the suitor said in his Friday announcement.

In addition, the issues raised during the Victoria Royal Commission on Crown Melbourne have the potential to have a significant impact on Crown’s value, especially if it retains the license to operate its Melbourne casino or the conditions in which its license is retained, “added Star Entertainment.

The contender company said its proposal described “significant strategic and value-creating benefits” to shareholders of both companies, including “estimated cost synergies of between AUD 150 million and AUD 200 million per year and the potential to create significant value from a sale-leaseback (or similar structure) of the extended real estate portfolio.

Star Entertainment was always “open to exploring potential value enhancement opportunities with Crown. [Resorts]”said Friday’s filing.

The suitor added that he “would continue to closely monitor the Victorian Royal Commission and the Perth Casino Royal Commission, with final findings expected later this year.”

Blackstone, Oaktree proposals

Crown Resorts said in a May 17 filing that its board of directors had unanimously decided that an offer from Blackstone Group Inc to acquire all of the shares of Crown Resorts at an indicative offer price of AUD 12.35 in cash per share, “Undervalues ​​Crown and is not in the best interests of Crown shareholders.”

In a June 15 filing, Crown Resorts said its board of directors “has yet to rule on the merits” of an offer to approximately AU $ 3 billion in funding, of Oaktree Capital Management LP – an investor in the Studio City casino complex in Macau, managed by former Crown Resorts partner, Melco Resorts and Entertainment Ltd.

Under Oaktree’s proposal, the proceeds were to be used by Crown Resorts to repurchase all or part of the latter’s shares held by Consolidated Press Holdings Pty Ltd, a private company linked to Crown Resorts’ long-time investor. , James Packer.

Star Entertainment recently faced its own regulatory hurdles in Australia.

Star Entertainment said in a June 7 filing that the country’s financial watchdog, AUSTRAC – Australia’s Center for Transaction Reporting and Analysis – had identified the possibility of a “serious breach” of trading rules. fight against money laundering and the financing of terrorism within The Star Sydney group. goods.

Concerns related to the establishment’s “management of clients identified as high risk and politically exposed persons” during the periods from July 1, 2015 to June 30, 2016; and from July 1, 2018 to June 30, 2019.

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