A merger between two of the largest gambling operators in Australia seems more and more unlikely following a comment that was made during an earnings call that took place on February 17th.
On Thursday, The Star Entertainment shared that it was unlikely to match a rival acquisition offer for Crown Resorts, making the slim chances of a merger between the two companies close to zero. Speaking on an analyst call following the announcement of the gambling operator’s earnings result, the chief executive officer of Star Entertainment – Matt Bekier – said that his company did not intend to match the improved takeover bid made earlier in February by the US private-equity firm Blackstone. At the time, the company boosted its Crown Resorts’ acquisition offer to a total of AU$8.9 billion.
He confirmed that Star Entertainment, which is currently one of the biggest gambling companies in Australia, would not be willing to match such a high price for the Crown Resorts assets, especially considering the unfavourable regulatory action against the operator and the absence of synergies.
The analyst call in which Mr Bekier took part was held after his company reported a difficult first-half trading period. The Star Entertainment revealed that the operating restrictions implemented because of the coronavirus pandemic slashed its performance and it fell from an AU$49.1-million profit to an AU$74.2-million loss for the 6-month period that ended on December 31st, 2021.
Star Entertainment and Crown Resorts Struggle Financially Due to Covid-19 Restrictions
The other gambling giant in Australia – Crown Resorts – also suffered an increasing interim loss because its gambling venues in Sydney and Melbourne were forced to cease operations for months.
Crown Resorts revealed that the beginning of the Delta wave of the pandemic hit its performance over the last six months of the year, while it was also struggling financially amid the public inquiries held into its operations. The Australian gambling giant reported an AU$198-million loss during this period. Neither Crown Resorts, nor Star Entertainment will pay an interim dividend to their shareholders.
Steve McCann, the chief executive officer of Crown Resorts, noted that the first-half performance of his company reflected the continuous challenging operating conditions faced by the gambling giant as a result of the coronavirus pandemic. He further noted that the financial struggles of Crown Resorts also reflected the negative impact of the ongoing regulatory investigations.
As reported by Casino Guardian, a series of scandals associated with links to organised crime and money laundering practices has seriously hurt the reputation of the most powerful casino operator in Australia. Crown Resorts faced a number of public inquiries, which in the past years have cast doubt on the company’s ability to keep its iconic casinos in Melbourne, Perth and Sydney operational.
On the other hand, John O’Neil, chairman of Star Entertainment, said that his company’s domestic earnings prospects were still attractive thanks to the long-term operating licences in attractive locations, despite the aforementioned loss.
- Author
Olivia Cole
