The slim chances of a merger between Australia’s two biggest casino companies has been all but extinguished after The Star Entertainment Group said it was unlikely to match a rival takeover bid for the James Packer-controlled Crown.
Speaking on an analyst call after its earnings result, Star chief executive Matt Bekier on Thursday said his company would not be matching the improved $8.9 billion bid from US private equity giant Blackstone made earlier this month.
“At that price, we’re out,” he told the call.
“For us, it looks like a very rich price, particularly given the likely regulatory action in Victoria and NSW and the absence of synergies.”
The Star last year made a $12 billion offer for its beleaguered rival but pulled its scrip-heavy offer as Crown struggled to pull itself out of a worsening regulatory quagmire.
Mr Bekier’s call came after The Star reported a bruising first-half trading period in which Covid-19 operating restrictions knocked it from a $49.1 million profit to a $74.2 million loss for the six months to December 31.
Similarly, Crown Resorts also widened its interim loss, as its Melbourne and Sydney venues remained shut for months.
Crown was $198 million in the red for the Delta-affected final six months of the year in which it also racked up a significant legal bill amid damaging public inquiries into its operations.
Neither The Star or Crown will pay an interim dividend to shareholders, with each company in the doldrums on the ASX on Thursday.
“Crown’s first half performance reflects the continued challenging operating conditions as a result of Covid-19, as well as the impact of ongoing regulatory matters,” Crown chief executive Steve McCann said.
Despite slipping to a loss, Star chairman John O’Neill declared his company’s domestic earnings prospects “remained attractive”, and were “underpinned by valuable long-term licences in compelling locations.
The Star also unveiled designs for the biggest tower in its $3.6 billion Queens Wharf Development, which will soar 71 floors above the Brisbane River and provide more than 800 apartments.
“The transformation of our properties into globally competitive integrated resorts is nearing completion,” Mr O’Neill said.
Suitors have been circling Crown for a number of years as punters speculate over Mr Packer’s desire to sell down his 37 per cent stake and exit the company completely.
US casino giant Wynn mxjmtzywade a $10 billion cash-and-scrip offer for Crown in April 2019 that valued the company at $14.35 per share, only for the deal to fall apart.
A series of damaging scandals linked to money laundering and organised crime has since shredded Crown’s reputation, with several public inquiries casting doubt on the company’s ability to operate its casinos in Melbourne, Perth, and Sydney.
Blackstone’s $13.10 cash offer on February 14 values Crown below its share price in 2019, but is understood to be backed by Mr Packer.
