Casino chiefs meet to discuss Star-Crown merger
The potential Star-Crown merger is gaining momentum, with Crown Resorts boss Steve McCann and Star Entertainment chief executive Matt Bekier meeting recently.
The Australian Financial Review reports that three weeks after starting in his new role as chief executive, Mr McCann met with Mr Bekier for a chance to talk through why Star thinks the proposed merger has legs.
It’s the first company to company engagement since the merger proposal landed on May 10, apart from Crown asking Star for more information about the merger on May 17 “to better understand various preliminary matters”.
Bekier is understood to have dialled into the meeting via Zoom and Crown’s adviser UBS was privy to the conversation, as was one of Star’s advisers, Flagstaff Partners.
Star also has Credit Suisse and King & Wood Mallesons in its corner on the deal.
Mr Bekier’s pitch to Mr McCann is said to have focused on the $150 million to $200 million worth of synergies Star believes the merger could present, as well as the value that could be unlocked from the sale and leaseback of a combined Star/Crown property portfolio.
The Star boss also ran through how the company’s development projects at Queen’s Wharf, Brisbane and the Gold Coast were tracking.
The Star camp would be taking the meeting as a good sign that Crown is seriously considering its merger proposal, and now Bekier has made his pitch, the ball is firmly in Crown’s court.
However, gaming giant Crown does have a lot on its plate besides the potential Star-Crown merger.
The company is also in rival suitor Blackstone’s sights and has a funding proposal from Oaktree to contemplate, and that’s not to mention an ongoing royal commission in Victoria.
Oaktree revises its Crown offer
In mid-June, Oaktree made a revised offer to Crown, with a seven-year, $3.1 billion deal, consisting of a private loan worth $2 billion and a $1.1 billion loan convertible into new shares.
The convertible component could allow Okatree to acquire a 10 per cent stake in Crown.
The convertible component of the deal would allow Oaktree to acquire the new shares at a price of $13 each in specified circumstances, including at any time after the first anniversary of the facility provided that the Crown share price is above $13, based on a 30-day volume weighted average price.
However, the number of shares issued to Oaktree would be capped at an amount that ensures the Los Angeles-based asset manager cannot hold more than 10 per cent of Crown’s shares on issue.
Blackstone bid given little consideration
In May, private equity group Blackstone sent a revised takeover offer to Crown, maintaining its $11.85 a share indicative offer, but removing a handful of conditions and committing to acquire Crown in the third quarter of this year.
Conditions dropped included the financial condition.
It is understood Blackstone said it could have its bid fully formed and ready to be implemented in the third quarter of this year, which is when it expects to receive probity clearances from Australian states, including NSW and Victoria.
The revised proposal, sent to Crown executive Helen Coonan and her bankers at UBS, appears to be another attempt by Blackstone to get the casino company to engage on its offer and set out to convince both Crown and its shareholders of its expertise in the gaming sector.
It is understood that Crown and its advisers have been reluctant to engage in confidential talks with Blackstone and a Star-Crown merger is more likely.
A proposed takeover bid faces numerous hurdles and regulatory risks, including several inquiries into Crown by state-based regulators, looming class actions and financial regulator AUSTRAC investigating Crown for potential breaches of Australia’s anti-money laundering and counter terrorism financing laws.
The takeover talks are ongoing, amid royal commissions into Crown in Victoria and Western Australia.