Crown and Star tie up would be strategically sound: Citi

A merger between Australian casino operators Crown Resorts and Star Entertainment Group could deliver up to A$100 million (US$77.4 million) in cost synergies, according to Citi analysts who ran the numbers on the hypothetical deal.

Citi analyst Rohan Sundram said while the tie up between the two companies was “merely speculation”, he believed a merger would bring enhanced operational scale and market share, cost synergy realization and improved growth outlook for Crown.

“Through its expanded scale across Australia, we estimate that a combined Crown and Star would increase its share to around 86 per cent of domestic mass market revenue and 90 per cent of VIP revenue amongst the major casino operators,” said Sundram, quoted by The Australian.

The analyst said the duo would also be able to offer more compelling loyalty programs to customers across their properties nationally.