Blackstone Enters Into Exclusive Talks to Acquire Crown After Upping Bid to AU$8.87bn

  • Blackstone has entered exclusive Crown talks, raising its bid to AU$13.10 (US$9.58) per share
  • The takeover still requires shareholder approval, but the board will recommend the offer
  • Star and Oaktree Capital Management have also made bids for the Australian operator
  • Packer has expressed a desire to rid himself of Crown shares due to various recent challenges
Digital auctioneer hammer
Blackstone is close to securing the acquistion of Crown Resorts after upping its bid to AU$8.87bn (US$6.48bn). [Image:]

Bidding war nears end

As beleaguered Australian casino giant Crown Resorts continues to face adversity in the form of inquiries and lawsuits, various companies have competed to acquire the operator in a bidding war. Now, it seems that battle has reached its conclusion, with US private equity firm Blackstone looking very likely to seal the deal. 

around AU$870,000 (US$635,583) higher than its initial bid made in March 2021

Blackstone has entered into exclusive talks with the casino giant after upping its bid. As reported by Daily Mail Australia, Crown confirmed on Thursday that it had received a revised offer from Blackstone totaling at least AU$8.87bn (US$6.48bn). That’s around AU$870,000 (US$635,583) higher than its initial bid made in March 2021.

The offer values the casino company at AU$13.10 (US$9.58) per share – a bid Crown said its board would unanimously recommend investors accept. Casino mogul James Packer, who owns 37% of Crown, is also expected to accept the offer after backing the initial Blackstone bid last March. He will earn a payday of AU$3.3bn (US$2.41bn) as a result.

Any takeover will require shareholder approval with support from 75% of Crown board members. The company’s shares spiked 9% to AU$12.68 on Thursday morning, their highest price since June 4, 2021.

Who will lose out?

If Blackstone’s offer is ultimately successful, it will mean bad news for the two other companies involved in the bidding war for Crown Resorts.

In April last year, another private equity firm threw its hat in the ring. Oaktree Capital Management offered AU$3bn (US$2.32bn) to help the company buy back its shares from James Packer. It would have seen the business purchase shares from Consolidates Press Holdings Pty Limited, the private company owned by Packer.

Casino company Star Entertainment joined the bidding war one month later with a non-binding nil-premium offer of 2.68 of its shares for each Crown share. Based on its share price at the time, this equated to AU$10.48 (US$7.65) per Crown share, with the option of a cash alternative worth AU$12.50 (US$9.13) per share, available up to a maximum of 25% of the total issued.

In May, Crown seemed to favor Star’s offer, claiming that the Blackstone bid undervalued its assets and potential for future earnings. Star said a merger with Crown could lead to annual cost savings of AU$150m (US$109.6m) to AU$200m (US$146.1m). It claimed the resulting company would hold a value of AU$12bn (US$8.76bn) and would have control over seven casinos in four Australian states.

Heading for the door

James Packer spent 20 years building his Australian casino empire through Crown, but the billionaire has been looking to offload his stake in the company due to various challenges over the past two years.

issues such as money laundering and association with triad gangs

The company has faced multiple inquiries into its casinos focused on issues such as money laundering and association with triad gangs. This cost the operator its Sydney license in February 2021, meaning Crown has not yet opened the gaming floor on its AU2.2bn (US$1.6bn) Barangaroo casino project.

The Independent Liquor and Gaming Authority has since confirmed that it is working with Crown to open the casino in early 2022. No doubt, the removal of James Packer from the picture will help the company’s chances, with the business mogul a main focus for much of the criticism aimed at the company during the New South Wales inquiry.

Outside of inquiries, the company has also just settled a class-action lawsuit relating to a 2016 marketing campaign in China by paying AU$125m (US$91.3m). The suit alleged that Crown did not inform shareholders about a marketing campaign that led to the arrest of 19 of its staff members in China.

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