A bidding war has erupted for Crown Casinos after the Brisbane-based Star Entertainment served a merger bid that would create a $12 billion gambling giant based in Queensland.
The proposal came as Blackstone lifted its offer to an indicative price of $12.35 a share, a 50 cent a share increase.
Star said its offer, which would see the merged company retain an ASX listing, has a dual proposal in which Crown shareholders can receive either 2.68 Star shares for every Crown share or a cash alternative valued at $12.50.
Investors pushed Star shares 7 per cent higher and Crown shares jumped 4 per cent to $12.61 on market open.
The merged group would then own six resorts around Australia, including the massive Queen’s Wharf project in Brisbane and the Star Gold Coast resort.
Star said that based on its recent trading volumes its pro forma share price to be more than $5 a share which would imply a value of its bid at $14.
It also claimed there would be between $150 million and $200 million a year in cost synergies with an estimated net value of $2 billion and chairman John O’Neill said there would be benefits from the increased scale and diversification. There would also be value unlocked from the sale and leaseback of the enlarged property portfolio.
“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,” O’Neill said.
Star’s bid also claims to create a stronger balance sheet and increased cash flow that would accelerate debt repayment and support full-franked dividends as well as continued investment.
What it also delivers is a viable cash option for Crown’s biggest shareholder Jamie Packer’s Consolidated Press Holdings.
Under the deal Star shareholders would own 41 per cent of the merged entity.
Star said it could complete the due diligence and have a binding merger offer in the next eight to 12 weeks and it was confident it would be able to get regulatory approval.
Crown said it was yet to form a view on the Blackstone or Star offer but would now star an assessment.
Article Source: inqld.com.au
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