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Investors keen to pursue The Star/SkyCity merger

Wed, Dec 7, 10:51am by Staff Writer

Investors desperate to see a possible merger between casino giants The Star and SkyCity are said to be moving against SkyCity chairman Chris Moller, who opposes the merger.

Moller and John O’Neill, the chairman of The Star Entertainment Group (SEG), enjoyed a frosty relationship during their previous roles heading up the boards of the New Zealand Rugby Union and Australian Rugby Union respectively.

They fell out over a failed bid for Australia and New Zealand to co-host the 2003 World Cup and Skycity investors believe this is a key reason behind Moller’s objection to a merger.

The Australian is reporting that major institutional investors, including Perpetual, Investors Mutual and Maso Capital, are pushing for Moller to be replaced via an extraordinary general meeting.

A merger would create an Australasian casino powerhouse, with casinos in Sydney, Gold Coast, Brisbane, Adelaide, Darwin and Auckland.

SEG is also building the new casino at Queen’s Wharf in Brisbane, which is expected to open by 2022.

SkyCity, headquartered in New Zealand, is valued at around $2.5 billion, while SEG is worth around $4.2 billion. But both companies have declined in value since mid-year, with SkyCity’s share price down from $4.85 to $3.67 in that time, while SEG has come down from $6.08 to $5.14.

Both companies’ prices slumped after news broke in October that key rival Crown Resort’s hopes of expansion in China has been dealt a blow with 18 of its staff detained over allegedly marketing the company’s services to Chinese nationals.

The crackdown by the Chinese government is a blow to all casinos in the region who target Chinese VIPs.

The decline in share value puts both companies in a position to consider a merger and SEG’s chief executive, Matt Bekier, has indicated he is interested in pursuing a merger should the price be right.

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