Star withdraws offer for rival Crown after ‘limited engagement’ between casino giants

Crown’s rival, Star Entertainment, has withdrawn its offer for the beleaguered casino giant, concerned it may be stripped of its Melbourne licence.

Star Entertainment has walked away from its bid for embattled casino giant Crown, sparking speculation about whether it will roll the dice once more or if others will step in.

Crown’s rival announced on Friday it had withdrawn the non-binding offer, saying it had so far “had limited engagement with Crown on its proposal”.

“Also, issues raised at Victoria’s Royal Commission into Crown Melbourne have the potential to materially impact the value of Crown, including whether it retains the licence to operate its Melbourne casino or the conditions under which its licence is retained,” Star said.

“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.”

The separate royal commissions were sparked by damning findings from last year’s NSW investigation, which uncovered evidence Crown had turned a blind eye to various forms of money laundering by high-roller Asian “junket” tours at its Perth and Melbourne venues.

Crown does not have a gaming licence for its new $2.2bn casino at Barangaroo, Sydney as a result of the NSW inquiry. Picture: Nikki Short / NCA NewsWire

At the Victorian probe’s closing submissions earlier this week, counsel assisting Adrian Finanzio gave a scathing assessment of Crown, saying it wasn’t fit to hold a gaming licence after leaving itself “wide open to exploitation by money launderers in the past”, questioned the company’s commitment to change and said it had lost public confidence.

Crown’s lawyers are scheduled to give their wrap-up comments on August 3, while the Perth probe will move to hearing witnesses next week, starting with former director John Poynton.

Star said it remained “open to exploring potential value enhancing opportunities with Crown” and would continue to closely monitor the royal commissions, with Victorian findings expected by October 15, while the West Australian interim findings are expected to be tabled in parliament in August.

Crown said it remained willing to engage with Star.

CCTV footage of a man exchanging huge piles of cash for gaming chips at Crown Melbourne was first aired in media reports, sparking the NSW probe.

“The board is committed to maximising value for all Crown shareholders and will carefully consider any proposal that is consistent with this objective,” the gambling giant said.

CommSec analyst Steve Daghlian said: “I guess the door is still open there.”

Meanwhile, there has been no update on US private equity giant Blackstone since mid-May, when Crown rejected its takeover offer.

Such proposals – particularly multiple ones – tend to have a positive impact on the target’s share price, but Crown has racked up its seventh straight day of losses and is down about 15 per cent this month.

It’s still up about 4 per cent from the start of this year, Mr Daghlian noted, but underperforming the broader market, which has gained about three times as much in the same period.

“It’s had a rough ride – obviously the lockdown situation hasn’t helped, either,” he said.

Shareholders were clearly not celebrating the Blackstone rejection and Star withdrawal, Mr Daghlian said.

Originally published as Star withdraws offer for rival Crown after ‘limited engagement’ between casino giants