Embattled gaming groups Crown Resorts and Star Entertainment are no strangers to merger talk with the latter having launched a $12 billion bid to bring Australia’s biggest casino operators together in 2021.
On Monday, Crown said it would cut almost 200 jobs and reduce operating hours in Sydney. And that had Star bulls talking. Could Blackstone, which took Crown private last year, be worried enough to turn to its casinos cross-harbour rival to find cost synergies?
The Crown Sydney employs about 2000 staff. Dominic Lorrimer
It also follows the casino shutting one of its Barangaroo gaming floors and axing 5 per cent of its Sydney workforce in August after weak economic conditions made one of the two VIP gaming floors unviable.
There’s no suggestion any deal is afoot – only that Star investors are keen on any move that could get the company’s share price moving. In just over two years, its has gone from pursuing its rival and a market capitalisation of $3.5 billion to be worth just $1.6 billion.
When Star looked at Crown in 2021, management estimated the merger would deliver between $150 million and $200 million of cost synergies per annum and unlock $2 billion in net value – or more than Star’s current market cap. This forecast, of course, came from the same people who put Star in a hole – so take it with a grain of salt.
Management added that it would deliver balance sheet strength and free cash flow to accelerate debt repayment and unlock value from the sale and leaseback of an enlarged property portfolio.
Star Entertainment boss Robbie Cooke handed the hat around again in September. Louie Douvis
Star ultimately withdrew its merger proposal citing uncertainty over whether the James Packer-controlled firm would retain itsRead more on afr.com