The Star Entertainment Group has withdrawn its $12 billion merger proposal with besieged rival Crown Resorts, due to continuing uncertainty over the James Packer-controlled firm retaining its casino licences following royal commissions in Victoria and Western Australia.
Star informed Crown that it has withdrawn its conditional, non-binding, indicative proposal on Friday.
The proposal outlined significant strategic and value accretion benefits for the shareholders of both companies, including estimated cost synergies of between $150-$200 million per annum and the potential to create significant value from a sale and leaseback of an enlarged property portfolio.
Star confirmed that despite having limited engagement with Crown on the proposal, issues raised at Victoria’s Royal Commission into Crown Melbourne have the potential to materially impact the value of Crown. In particular, whether it retains the licence to operate its Melbourne casino or the conditions under which its licence is retained.
While Star believes substantial benefits could be unlocked by a merger, the uncertainty surrounding Crown is such that it is unable to continue at the present time with its proposal in its current form, however, it remains open to exploring other potential value-enhancing opportunities with Crown. The Star will continue to closely monitor the Victorian Royal Commission and Perth Casino Royal Commission, with final findings expected later this year.
The Star concluded its release noting that it remains focused on its growth initiatives including its multi-billion dollar Queen’s Wharf Brisbane integrated resort due to open in late 2022 and its Gold Coast masterplan.