Battle lines drawn for Crown takeover

There is likely to be a public review of a plan to merge the two largest casino groups in Australia.

The competition regulator’s chief is widely reported in the Australian press as intending to look carefully at the merger of the Star Entertainment group and Crown Resorts.

Crown has run into major problems recently, mainly concerning money laundering, and now the Star’s proposal would see one operator controlling the gambling operations across most of Australia’s main cities.

Rod Sims, chairman of the Australian Competition and Consumer Commission, said he planned “a detailed investigation – a public review.”

Key to the competition problem would be The Star in Sydney, the city’s only major casino, and the nearby Barangaroo project for a super-luxury hotel with VIP gaming.

The Star offer would see Crown stakeholders receiving 2.68 Star shares, not including any takeover premium. The deal is based upon the three-month average price of Crown shares up to March 19. That was the date of a rival takeover offer from US private equity company Blackstone, which led to the value of the shares rising steeply.

James Packer owns 37 per cent of the Crown shares and has stepped down from any active capacity within the group. The Star has indicated that a merged board for the two companies would see the current directors remaining in position initially. Blackstone already holds 10 per cent of the Crown shares and has already hiked its bid to an indicative price of A$12.35.

While all of this has been going on, Crown has appointed Steve McCann as its new CEO subject to regulatory approval. He is currently CEO of the real estate and investment group Lendlease from which he was due to retire at the end of this month. Now he will join Crown from June 1.

Star chairman John O’Neill is quoted in a press release as saying: “The merger would result in significant scale and diversification and unlock an estimated A$2bn in net value from synergies.

“With a portfolio of world-class properties across four states in Australia’s most attractive and populated catchment areas and tourism hubs, the combined group would be a compelling investment proposition and one of the largest and most attractive integrated resort operators in the Asia-Pacific region.”