Casino giants meet to discuss potential merger

The CEOs of Star Casino and Crown Resorts have met to explore potential merger options.

Crown Resorts has been under immense scrutiny lately.

An investigation last year led by former Supreme Court judge Patricia Bergin uncovered evidence of money laundering at Crown Resorts Melbourne and Perth casinos.

This led the inquiry to state that its Barangaroo operations would be unable to hold a casino licence until it fixed systemic problems.

Investigations in Victoria and Western Australia are still ongoing, however Crown has so far made substantial changes including agreeing to make all of its casinos cashless, which has pleased the NSW Independent Liquor and Gaming Authority (ILGA).

There is now talk that Crown will be able to open the Barangaroo casino by the end of the year.

In the meantime, it has received several buy-out and merger offers.

Leading the way is Star Casino.

The Australian reports that Steve McCann of Crown Resorts and Star CEO Matt Bekier have been discussing a possible merger put forward by Star in May.

McCann has been in the job for just a month after replacing Ken Barton, who resigned as part of the fallout from the investigations into Crown’s operations.

Crown is said to be more amenable to a deal with Star, which has put $AU9 billion on the bargaining table, than any other suitor including Oaktree Capital Group and the Blackstone Group.

Any deal, however, would be some time away despite making economic sense

The proposal put forward by Star would see Crown shareholders retain 59% of the merged companies. Further to this, Bekier has stated that the merged companies would benefit from as much as $150 million (AU$200M) in annual cost savings.

Any deal with Star now would also prevent Crown Resorts from being forced by authorities to split up later.

There are definitely plenty of advantages, but whether a merger goes ahead remains to be seen.

Irit Jackson, 23rd June 2021