Crown Resorts has a new competitor as The Star Entertainment offers a deal
It took a while, but The Star Entertainment Group eventually she decided to take a step forward and offer a deal to buy beleaguered Crown Resorts. The casino and hotel company have made a formal offer to buy the Crown for $ 7 billion (A $ 9 billion) under an all-stock agreement to compete with existing offers by Blackstone Group and Oaktree Capital . If the acquisition were selected and approved, with Crowns and Stars respectively, ranked first and second in the Australian casino industry, the result would be a massive gaming and hospitality company that would control a large part of the domestic gambling industry.
A star on the crown
Initial reports indicated that Star might be ready to propose 9.4 billion (AUD $ 12 billion) mergers. Eventually, an offer hit the table where the company would deliver 2,667 shares for each crown share, estimating each of its own shares would be worth $ 3 93 if the deal moved forward. That would mean the deal is around $ 7 billion, but the final price will be determined when the negotiations get serious.
There is still a long way to go for that to happen. Blackstone and Oaktree were already hunting Crown assets, but when it became clear that The Star was going to get involved, they realized they would need to improve their trades. Blackstone has increased its $ 6.2 billion cash offering to $ 6.6 billion, and Oaktree, which previously offered to buy out shares of Crown founder James Packer for $ 2.3 billion, is likely to increase its deal as well.
Blackstone, Oaktree still possible
Had Star's proposal been accepted by Crown and gaming regulators, there would still be an opportunity for Blackstone, Oaktree, or to get involved. It is likely that the company would investigate a sale and leaseback program for some properties, and since the other two have the money and a willingness to get involved, it would be easy to reverse some of Crown's assets shortly after closing. The idea of taking control of Crown by The Star was met with initial favor from investors, and after the announcement, the share prices of both entities began to rise.
A restructuring at Crown is inevitable, whether through an acceptable acquisition or a forced acquisition. The company was already deemed "inadequate" to operate casinos in New South Wales (NSW), and investigations are still pending in other Australian states. Victoria and Western Australia are currently investigating the company and may come to the same conclusion as NSW. These decisions may be made in the next few weeks.
The Star is struggling to gain more support for its proposal, and chairman John O'Neill said in a statement: "With a portfolio of world-class real estate in four states in Australia's most attractive and populated areas of watersheds and tourist hubs, the combined group would be an attractive investment proposition and one of the largest and most attractive integrated resort operators in the Asia-Pacific region. "