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  • The Star Entertainment Group has entered the race for Crown Resorts (CWN) with an unsolicited merger proposal
  • Star would exchange 2.68 of its own shares for each individual Crown share, which it said values Crown’s stock at more than $14 each
  • It also offered to purchase Crown’s shares at $12.50 each, up to a cap of 25 per cent of Crown’s total issued capital
  • Both options exceed a revised offer from Blackstone, which bumped its proposal this morning from $11.85 to $12.35 per share
  • Crown said it has not yet formed a view on the merits of the proposal and will begin a process to assess the offer
  • Crown Resorts is up 3.96 per cent to $12.60 per share

The Star Entertainment Group has entered the race for Crown Resorts (CWN) with an unsolicited merger proposal.

According to the offer, Star would exchange 2.68 of its own shares for each individual Crown share, which it said values Crown’s stock at more than $14 each.

As an alternative, Star has also offered to purchase Crown’s shares at $12.50 each, up to a cap of 25 per cent of Crown’s total issued capital. Assuming this offer is fully taken up, Crown shareholders would own 59 per cent of the combined company while Star shareholders would own 41 per cent.

Both options exceed a revised offer from New York-based private equity firm Blackstone, which bumped its proposal this morning from $11.85 to $12.35 per share.

In a letter detailing the proposal, Star said the merger would culminate in cost synergies between $150 million and $200 million each year and would create a $12 billion casino and entertainment giant.

“A merger of The Star and Crown would result in significant scale and diversification and unlock an estimated $2 billion in net value from synergies,” said John O’Neill, Chairman of Star Entertainment.

“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.”

Completion of the deal remains subject to a number of conditions, including the execution of a definitive agreement, approval from both Crown and Star’s shareholders, and approval from the necessary regulatory bodies.

Crown said it has not yet formed a view on the merits of the proposal and will begin a process to assess the offer.

As if the embattled entertainment company didn’t already have a busy enough morning, it also unveiled the appointment of Steve McCann as Managing Director and CEO, replacing interim chief Helen Coonan who will continue as interim Executive Chairman for the time being.

McCann is currently CEO of real estate and investment group Lendlease and will join Crown on June 1.

“During a comprehensive recruitment process, Steve was the clear choice from a quality field of prospective candidates,” Coonan said.

“The Board was looking for a CEO firmly committed to building on the momentum for change within our business and Steve is ideally placed to hit the ground running as our sweeping reform program takes hold.”

Crown Resorts is up 3.96 per cent to $12.60 per share at 10:31 am AEST.

CWN by the numbers
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