No opinion from Crown board yet
Australian casino company Crown Resorts has received an unsolicited AU$8bn (US$6.2bn) takeover bid from the New York-based private equity firm The Blackstone Group Inc.
20.2% premium on Crown’s closing share price of AU$9.86 (US$7.63) last Friday
Crown Resorts confirmed the AU$11.85 (US$9.17) per share offer on Monday, amounting to the AU$8bn total based on 677 million shares outstanding. The bid represents a 20.2% premium on Crown’s closing share price of AU$9.86 (US$7.63) last Friday.
The Crown board will assess the offer and consult with relevant stakeholders. The bid will need to get unanimous support from the Crown board as well as a commitment from the company directors. This offer is also conditional on a Blackstone-owned Crown being a suitable “person” to “own and operate the Sydney, Melbourne & Perth licenses and other gaming-related approvals as required.”
Following the news of the takeover bid, Crown’s share price closed at AU$11.97 (US$9.26) on Monday, a 21.4% jump.
Experience in the casino space
Blackstone already owns a 9.99% stake in Crown Resorts, acquired last April from Melco Resorts & Entertainment Limited for AU$8.15 (US$6.31) per share. In April 2019, Wynn Resorts was considering making an AU$14.75 (US$11.41) per share offer for Crown Resorts, scrapping the deal after Crown Resorts disclosed the bid prematurely.
JP Morgan analysts think that Blackstone’s takeover offer is a low-ball and do not believe that Crown’s board and shareholders will accept it.
The Blackstone Group also has a number of casino holdings in Las Vegas. In October 2019, it bought the Bellagio casino resort in Las Vegas for US$4.25bn. It also owns The Cosmopolitan casino resort in Las Vegas and a Spanish-based casino operator. The private equity firm is a co-owner of the Mandalay Bay and MGM Grand properties in Sin City. Blackstone’s preferred strategy is owning the real estate of the casino resorts and leasing the operations of the casino to dedicated operators, such as MGM Resorts International.
A struggling company
Crown Resorts has had its troubles in recent years, with the News South Wales (NSW) Independent Liquor and Gaming Authority releasing a condemning report about the company in February.
The Bergin Report outlined why Crown Resorts is not suitable at the moment to hold a Sydney casino license. The recommendation was for several reasons, including the company’s links to organized crime and instances of money laundering. On the back of the report’s conclusion, then-Crown Resorts CEO Ken Barton and a number of directors resigned.
Inquiries into Crown Resorts begin this month in Victoria and Western Australia. The royal commissions will assess whether or not the casino company is suitable to hold casino licenses in Melbourne and Perth. Expectations are that the recommendations will arrive in the latter half of 2021.