Crown Resorts Limited (ASX:CWN) made an indicative proposal to acquire The Star Entertainment Group Limited (ASX:SGR) in a reverse merger transaction for AUD 7.5 billion on May 9, 2021. The transaction will be carried out a via a scheme of arrangement. Under the terms of the transaction, Star Entertainment Group Limited will acquire Crown Resorts Limited and the consideration for the merger proposal will be 2.68 Star shares for each Crown share. The proposal also contemplates a cash alternative of AUD 12.5 per Crown share, subject to a cap equal to 25% of Crown's total shares on issue (with any scale back to occur on a pro rata basis). After the transaction, The Star and Crown shareholders will own 34% and 66% of the combined entity respectively. Assuming the cash alternative is fully taken up, the merger proposal would result in pro forma ownership of the merged entity of 59% for Crown shareholders and 41% for Star shareholders.

The Board of the merged entity would initially comprise of the current Directors of each of Crown and Star. The transaction is subject to execution of definitive merger documentation, approval of shareholders of Crown Resorts and The Star Entertainment, approval from the relevant State-based casino regulators of Crown and Star, approval from Australian Securities and Investment Commission, approval of The Australian Securities Exchange, clearance from the Australian Competition and Consumer Commission (ACCC) and approval from other relevant regulators. The execution of definitive merger documentation is subject to various matters including completion of satisfactory due diligence, agreeing merger documentation containing terms, conditions and deal protections typical for a transaction of this nature, discussions with regulatory bodies to provide confidence that the pursuit of regulatory approvals would not unfavorably affect the timing or nature of the merger, agreeing with Consolidated Press Holdings Pty Limited (CPH) and relevant gaming authorities appropriate undertakings in relation to any CPH shareholding in the merged entity above Star's shareholder cap of 10%, debt financing for the merged entity is arranged and documented, The Star and Crown Boards approving a resolution to enter into binding merger documentation and recommending that their respective shareholders vote in favor of the merger. As of May 10, 2021 and May 17, 2021, the Crown shareholders do not need to take any action in relation to the merger proposal at this stage. The Star is confident the ACCC will ultimately not oppose the combination. The Star Entertainment has received all necessary internal approvals for the submission of the proposal. The transaction will result in cost synergies. The transaction is expected to be highly accretive to both, The Star Entertainment Group Limited and Crown Resorts Limited. Tony Burgess of Flagstaff Partners Pty Ltd and Angelo Scasserra of Credit Suisse (Sydney Branch) acted as the financial advisors and King & Wood acted as the legal advisor to The Star Entertainment Group Limited. Kelvin Barry of UBS Group AG (SWX:UBSG) acted as the financial advisor to Crown Resorts Limited