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  • Crown Resorts (CWN) has dismissed a takeover bid from Blackstone Group but said a merger with The Star Entertainment Group may still be at play
  • Following an in-depth review, the gaming giant has deemed the offer to be undervalued and not be interest best interests of its shareholders
  • However, a separate statement said Crown’s board has not yet formed a view on the merits of the merger proposal from Star, and will seek further information to reach a conclusion
  • The update comes as Crown prepares for public hearings — due to begin today — at Victoria’s royal commission into its suitability to hold a licence for its Melbourne casino
  • Shares in Crown Resorts are up a slight 0.31 per cent to trade at $13.08

Crown Resorts (CWN) has dismissed a takeover bid from Blackstone Group but said a merger with The Star Entertainment Group may still be at play.

The entertainment giant received a revised offer from Blackstone last week, under which the U.S. private equity firm proposed to acquire all of Crown’s shares at $12.35 each.

Following an in-depth review, Crown has deemed the offer to be undervalued and not be interest best interests of its shareholders.

The company said its board had taken into account several factors, including the “significant value of Crown’s tangible assets” — like land, hotels and gaming facilities — and a substantial investment in Crown Sydney worth roughly $2 billion to date, despite the operation not yet providing meaningful contribution to Crown’s overall earnings.

However, a separate statement said Crown’s board has not yet formed a view on the merits of the merger proposal from Star.

According to the offer, which was received on May 10, 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 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. That would result in Crown shareholders owning 59 per cent of the combined company while Star shareholders would own 41 per cent.

“To facilitate the Crown board’s assessment of the Merger Proposal, Crown has requested Star to provide certain information to allow the Crown Board to better understand various preliminary matters,” the company said this morning.

The update on the bidding war comes as Crown prepares for public hearings — due to begin today — at Victoria’s royal commission into its suitability to hold a licence for its Melbourne casino.

The hearing will question Timothy Bryant and Jason Cremona from the Victorian Commission for Gambling and Liquor Regulation, with inquiries expected to focus on regulator’s monitoring of Crown, its investigation into the 2016 arrests of 19 staff across four Chinese cities, and junket operations.

For years, many have believed that the regulator has been too weak, under-resourced and ineffective.

“Confidence in the regulator — that it is not light handed because government is both a regulator and beneficiary of gambling revenue — is paramount,” one submission from the South Australian Centre for Economic Studies at the University of Adelaide said.

“Junket operators organise gambling holidays to casinos. Common risks include people carrying large amounts of cash into or out of countries, junket operators moving large sums electronically between casinos or to other jurisdictions, and layers of obscurity around the source and ownership of money on junket tours.”

Shares in Crown Resorts are up a slight 0.31 per cent to trade at $13.08 at 11:21 am AEST.

CWN by the numbers
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