Due to the uncertainty and ever-growing problems Crown Resorts has been facing in recent months, Star Entertainment decided to withdraw its $12 billion merger offer in late July. It was expected in the wake of highly damaging royal commissions in both Victoria and Western Australia.
However, now, only a few weeks later, Star is, once again, interested in taking over Crown. The Star CEO and Managing Director, Matt Bekier, stated that the company still wants to take over its rival casino organisation.
What’s more, he also stated that the company would consider buying the new Sydney casino. However, for that to be considered, the royal commission in Victoria would first need to split the casino business.
What the Victorian commissioner’s actions will be is one of Mr Bekier’s primary concerns. As Mr Bekier has stated, commissioner Ray Finkelstein has suddenly started considering splitting up Crown Resorts to ensure that the Melbourne casino is operated by “Victorians for Victoria”.
Matt Bekier is not strictly against this, but he fears that this prospect would bring lots of uncertainties for his company’s possible Crown acquisition. He doesn’t know what requirements will be imposed on Crown’s assets in Victoria. Due to that, he can’t make plans for what Star can and can’t do about the acquisition.
Once the decision has been made and Star knows what it could buy, the company can consider an acquisition. As Mr Bekier said, once they see what they can buy and how much it is worth, they can form a concrete decision.
It’s worth knowing that both Star and Crown consider the previous merger deal to be the best one for investors of both companies. However, as the agreement clearly stated which assets would go where Star cannot move forward until the commission makes its decision on some of the assets.
If that weren’t enough, another problem is the lack of leadership at Crown. Chairman Helen Coonan is set to exit the company by the end of August, and no one yet knows who will take over this crucial position.
Mr Bekier has said that this is a significant problem for his company as they have no one to engage with, no one who has clear directions as to what Crown can do in the future.
Star Entertainment is undoubtedly doing well regardless of the recent events surrounding Crown. The company’s share price jumped by 7% on Thursday from $3.40 to $3.64, but it is yet to go above its pre-pandemic worth of over $4 per share.
The 7% jump occurred right after the company stated it wanted to sell and lease its Sydney property and the Treasury Brisbane building.
Mr Bekier also stated that they are negotiating with the New South Wales government to acquire 1,000 more poker machines for Star’s Sydney casino. The reason for this is that other major casinos across the country have 2,500 slot machines, while Star’s Sydney casino only has 1,500. An additional 1,000 could also increase the company’s earning power by 11%.
As for Crown’s licence of its novel Sydney tower worth $2.2 billion, it’s still in suspension. After the Bergin Inquiry ruled out in February that Crown was unfit to hold this licence, its future has remained uncertain.