James Packer’s embattled Crown Resorts has received a merger proposal from rival casino operator the Star casino group.

The non-binding proposal offers 2.68 Star shares per Crown share – an implied value of $14 a share for shareholders.

Crown shareholders would also be offered the alternative of $12.50 cash per share, up to a limit of 25 per cent of its shares.

The proposal tops a resubmitted bid by US private equity firm Blackstone, which was raised from $11.85 to $12.35 over the weekend.

If successful, the merger would result in pro forma ownership of the merged entity of 59 per cent for Crown shareholders and 41 per cent for Star shareholders.

Crown said the board of the merged entity would initially comprise the current directors from each casino operator, with Star estimating the merger would result in “indicative cost synergies of between $150m and $200m per annum”.

Star casino group’s proposal would see the combined entity retain an ASX listing, with the company indicating potential to unlock significant value from a sale and leaseback of the merged entity’s property portfolio.

The merger would create a single casino operator, which would have operations in most major capital cities – Casinos in Adelaide and Tasmania would be the only two owned by other groups.

Star would also take control of Crown’s Barangaroo casino, which has been shut since the Independent Liquor and Gaming Authority concluded the company was “unsuitable” to hold a casino licence in the state following the NSW Bergin Inquiry.

Crown was found to have facilitated money laundering and did business with figures linked to organised crime.

The findings in NSW also sparked action from regulators in Victoria and Western Australia – the other two states in which Crown operates.

Victoria’s Royal Commission into the casino operator is due back by August, with Western Australia’s findings expected to be delivered by June.

The competition regulator said it will hold a a public review of the proposal.