Star poised to renew plan for Crown takeover

By Charlotte Lee Updated
Crown Resorts off the ASX as Blackstone takeover confirmed

Star Entertainment could be ready to make a plan for casino rival Crown Resorts.

The Australian reports that the Matthew Grounds-led Barrenjoey Capital Partners has emerged as an adviser to Star, fuelling suggestions it may make another play for Crown.

It comes as Crown recently met for the first time with its new chair, Ziggy Switkowski.

The emergence of Barrenjoey alongside Star in addition to its current adviser Credit Suelle was revealed by DataRoom online and offers a further indication that it remains in pursuit of its Australian casino rival.

Gaining the advice of Mr Grounds is being considered a stroke of genius by Star, given his deep insights into the psyche of James Packer and the Crown business.

Mr Grounds previously counted himself as the close adviser of Crown’s major shareholder Mr Packer, who is now working with advisory firm Moelis.

The seasoned investment banker was also previously the head of the Australian operations for UBS, which has been defence adviser to Crown Resorts for some time.

Crown’s Melbourne-based UBS banker Kelvin Barry was spotted in Sydney recently.

Blackstone’s recent offers rejected by Crown

The talk in the market comes after Blackstone relaunched its efforts to buy Crown with a $12.50 per share offer, valuing the company at $8.5 billion.

That offer was rejected by Crown.

Those close to the deal said that Mr Packer, who’s company Consolidated Press Holdings owns 37 per cent of Crown, would like Crown to open its books to Blackstone, which Crown agreed to do.

Mr Packer has also given an undertaking to various regulators that he will sell down to a stake of less than five per cent.

Star, run by Matt Bekier, made a $12 billion scrip merger proposal on May 10 for Crown, but withdrew its offer in July.

Despite Star’s obvious interest, there is considerable scepticism about whether it will be able to mount a bid.

Market experts believe that winning a battle with Blackstone with a scrip offer would be challenging, but not impossible for Star.

But a capital partner may provide the fire power it needs to take on the private equity giant.

Star faces uphill battle to takeover Crown

Compounding challenges for Star is that in a similar way to Crown, it finds itself at the centre of investigations surrounding money laundering at its Australian casinos, which are in Sydney and in Queensland.

Regulators may also take exception to the location of its head office, a point of contention among the recent Crown regulatory inquiries.

A logical partner for Crown is considered to be Charter Hall.

Crown’s value is in its property portfolio

Star Entertainment used Credit Suisse to run an auction of its property portfolio and it resulted in Charter Hall buying its Treasury Casino Hotel buildings and its Queen’s Gardens car park for $248 million, as announced on October 27.

A deal could work where Charter Hall owns the real estate.

However, Charter Hall typically partners with its pension fund clients on major transactions and sources say that some are cautious about investing in casinos due to investment requirements around environmental, social and governance factors.

Blackstone, which owns a 9.99 per cent stake in Crown, came forward with a $11.85 per share or $8 billion offer for Crown on March 22 that was rejected by Crown’s board and Blackstone later withdrew the offer.

The challenge for any buyer of Crown remains gaining regulatory approval, although it is believed some of Blackstone’s directors have already passed probity checks.

Market experts believe that Crown’s property empire accounts for about $8 of its $9.88 share price before the latest Blackstone offer emerged.

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