What does Star Group (SGR) merger with Crown (CWN) mean for shares?
CWN +7.26%: the resort and casino operator was thrown a life line from its nearest competitor Star Entertainment (SGR), offering a merger of equals. Star’s proposal would see holders receive 2.68 SGR shares for each CWN share, with the option of receiving $12.50/sh instead. Star saying the merger would achieve up to $200m/year of cost synergies. Both companies have had their indiscretions with the gaming regulator of late, however Crown looks to be under the pump and may need to see a change of management structure to resolve the problems, the merger being one potential solution. The competition authority may have a say though given, particularly in Sydney, they are very close competitors. On the back of the news, Blackstone upped their bid for Crown shares to $12.35 a pop – it looks as though the battle is on here, hence why shares are trading at a premium to both offers.
