On May 17th, giant Crown Resorts rejected the all-cash acquisition offer of Blackstone Group. The Australian casino giant described the takeover proposal, worth AU$6.5 billion, as too low. The rejected bid, however, does not mean that the company does not consider sale options, as it shared it was seeking more information over a proposed acquisition deal from its local rival Star Entertainment Group.
Crown Resorts decided to turn down Blackstone’s takeover bid at a time when the casino company is under fire because of intense scrutiny from Australian gambling regulatory bodies and is dealing with a profit decline because of the coronavirus pandemic.
The Australian gambling company revealed that it had considered a variety of options for its business, especially considering the ongoing regulatory enquiries into its operations.
As Casino Guardian previously reported, the US private equity company Blackstone, which already holds part of the casino operator’s assets, has made a takeover offer for the struggling gambling operator, worth AU$12.35 per share. Now, Crown Resorts explained that the proposed deal did not take into account the company assets’ full value, especially a potential increase in earnings once the Covid-19 situation improves and a planned payment of a considerable amount of debt is made.
Blackstone’s Offer Undermining the Value of Casino Company’s Assets
The US private equity firm already owns a 10% stake in Crown Resorts. After its takeover bid got rejected by the Australian company, Blackstone refused to make any comments on the matter. A person familiar with the situation who, however, was not allowed to unveil any more information and asked not to be named revealed that the firm has not had access to Crown Resorts’ books.
As recently reported by Casino Guardian, Crown’s rival Star Entertainment has also made a bid to acquire the struggling company. The gambling operator has shared that its all-stock takeover offer values Crown Resorts about AU$9 billion, which is more than AU$14 per share.
In a separate statement from the one rejecting Blackstone’s acquisition bid, Crown Resorts shared that it had not yet fully considered all the aspects of the proposal made by Star Entertainment but had asked for more details in order to get a better understanding of some important issues associated with the proposal.
The takeover offer made by Star Entertainment is expected to attract antitrust scrutiny as, if completed, it is to end up creating a gambling behemoth in the country, which could seriously affect competition in the sector. Furthermore, Oaktree Capital Group has made an offer to acquire the 37% stake of Crown Resort’s biggest investor – businessman James Packer – a move that would remove some regulatory concerns of the company.
The rejection of Blackstone’s acquisition bid comes while the Australian gambling giant’s executives are facing their first day of the six-week hearings by the Royal Commission in Victoria. The probe aims at assessing whether the company is suitable to keep its Melbourne casino’s operating licence.
- Author
Olivia Cole
