Star Withdraws Proposal To Merge With Billionaire James Packer’s Crown

star-withdraws-proposal-to-merge-with-billionaire-james-packer’s-crown

A Crown Resorts logo at the entrance to the Crown Melbourne casino and entertainment complex in … [+] Melbourne, Australia, on Wednesday, March 24, 2021.

Carla Gottgens/Bloomberg

Star Entertainment Group said Friday it pulled its proposed merger with Crown Resorts—controlled by billionaire James Packer—amid allegations of tax evasion and lax money laundering controls at Crown’s Melbourne casino.

Since Star proposed the merger in May, Australian regulators have widened probes of casino operators down under, with the anti-money laundering watchdog scrutinizing Crown’s Melbourne casino. Star’s all-share merger proposal with Crown would have created a A$12 billion ($8.9 billion) casino giant.

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

Losing the Melbourne casino license will be major blow to Crown, which has already failed to get the permit to run its brand new casino in Sydney. Regulators have argued that Crown is unfit to run its Melbourne casino after the company failed to address money-laundering risks and concealed potential tax underpayment.

“We continue to believe substantial benefits could be unlocked by a merger,” Star said. “However the uncertainty surrounding Crown is such that Star is unable to continue at the present time with its proposal in the form as announced on May 10, 2021.”

Both Crown and Star said they are open to exploring potential opportunities. “Crown remains willing to engage with Star in relation to a potential merger on terms acceptable to both Crown and Star,” Crown said in a separate statement.

Packer is the largest shareholder of Crown, which owns casinos in Australia and London, after taking over the empire of his late father, Kerry. He stepped down from the company’s board in March 2018 and resigned from the board of his family’s holding company Consolidated Press four months later. With a net worth of $3.2 billion, Packer was ranked Australia’s 15th-richest individual on the World’s Billionaires List published in April.

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