The US private equity firm Blackstone Group has addressed the struggling Australian gambling giant Crown Resorts with an acquisition bid of A$8 billion.
The investment firm’s offer has valued Crown’s shares at AU$11.85 each, which is a 20% premium to its closing share price last week. In order to be finalised, the deal would need the official approval of the Australian gambling regulators to allow Blackstone to own and operate the gambling giant’s casino venues in Sydney, Perth and Melbourne. The takeover offer is also subject to due diligence and would need the approval of Blackstone’s investment committees.
The unsolicited takeover offer comes at a time when the gambling company is under pressure by authorities in a number of Australian states. Only a few weeks ago, the New South Wales (NSW) Commissioner report found Crown Resorts unfit to hold an operating licence for its new AU$2.2-billion Barangaroo casino resort due to concerns about poor corporate governance and money laundering.
At the time it confirmed receiving the acquisition bid, the Australian gambling operator explained that its board has not yet made a decision whether to back the proposed deal and will start evaluating the takeover deal offered by Blackstone. The US private equity firm already holds a take of almost 10% in Crown Resorts, as well as some real-estate assets in Australia and a gaming experience in other countries.
James Packer and Australian Regulators Would Play an Important Role in the Deal’s Approval
If a deal is reached, it would mark another push into the casino sector for Blackstone. Back in October 2019, the company acquired the Las Vegas-based Bellagio resort from MGM Resorts International for the price of $4.25 billion.
As mentioned above, Blackstone already holds an almost-10% stake in Crown Resorts and has been considered a potential buyer of the recently struggling casino operator.
Whatever the board decides, the largest stakeholder in Crown Resorts – the Australian businessman James Packer who owns 37% of the company – will have an important role in any future agreement with Blackstone. According to some experts, there were signs he would willingly approve of the sale because of the ongoing regulatory action into the company and his own personal circumstances. In any case, the Blackstone offer provides Mr Packer with the chance to exit from the business amid the regulatory uncertainty Crown has been in for some time now.
As Casino Guardian reported, the NSW Commissioner report put some of the blame for the company’s transgressions on Mr Packer, who was once part of Crown Resorts’ board. The report harshly criticized the largest shareholder in the gambling operator for imposing too much control over the company. As a result of the report, five leading members of Crown’s board linked to Mr Packer left their positions.
Apart from the regulatory issues faced by the Australian gambling giant in a number of states, the company’s business has also suffered a significant financial blow because of the coronavirus pandemic. The restrictions imposed on international travel have made it impossible for foreign high-rollers to reach Australian casinos, not to mention the closures that the company has been forced to suffer because of local lockdown measures.
Blackstone’s acquisition bid is not the first time when Crown Resorts has become an asset of interest for US firms. In 2019, an indicative takeover offer that valued the Australian gambling giant at $7.1 billion was made by Wynn Resorts Ltd. However, the US gambling operator ceased the negotiations after revealing the decision of Crown to prematurely make an announcement of the acquisition offer.
- Author
Olivia Cole
