At the time of writing, the Star share price is up 1% to $3.58 and the Crown share price is down 3% to $9.94.
What did Star announce?
Investors have been selling down the Crown share price after Star revealed that it has withdrawn its conditional, non-binding, indicative merger proposal.
That proposal outlined significant strategic and value accretion benefits for the shareholders of both companies, including estimated cost synergies of between $150 million to $200 million per annum. It also highlighted the potential to create significant value from a sale and leaseback of the enlarged property portfolio.
However, it appears as though recent developments, including concerns that Crown could lose its Melbourne casino licence, have spooked Star’s management team. It notes that these developments have the potential to materially impact the value of Crown.
Star advised that it remains interested in merging with Crown, but not while there is so much uncertainty.
It explained: “We continue to believe substantial benefits could be unlocked by a merger, however the uncertainty surrounding Crown is such that The Star is unable to continue at the present time with its Proposal in the form as announced on 10 May 2021.”
“The Star remains open to exploring 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,” it added.
In the meantime, Star remains focused on its growth initiatives. This includes the development of its world-class multi-billion dollar Queen’s Wharf Brisbane integrated resort due to open in late 2022 and its Gold Coast masterplan.
Crown responded, saying that it remains willing to engage with Star in the future in relation to a potential merger.