The global investment company Oaktree Capital Group offered Australia’ Crown Resorts Ltd its help in buying back Packer’s share for AU$3 billion. This move meant a competition between Oaktree and its rival Blackstone Group which has also made a proposal for Crown’s buyback.
Oaktree’s offer to help Crown with buying the billionaire’s share came just one month after Blackstone made a full takeover proposal for AU$8 billion. Crown said it will consider both offers but did not specify what type of benefit would Oaktree receive if the casino accepts its proposal.
Packer to Potentially Receive AU$3 billion for His Crown Shares
After Oaktree has made its offer, the billionaire James Packer may be able to sell his shares in the casino for AU$3 billion. Once the Packer is no longer one of Crown’s shareholders, the company may work on improving its stability as regulators in Australia are doubting Crown’s suitability to operate casinos.
In February, a report of the regulator in New South Wales revealed a number of management issues and cultural failings. The watchdog reported that Packer had a negative impact on the company’s operations. The NSW Independent Liquor & Gaming Authority (ILGA) wanted to make sure that Packer would no longer be involved with any of Crown’s operations. The billionaire agreed on selling all of his shares and supported the company’s exit strategy. No matter Crown’s decision, any of the two offers will allow Packer to sell his 37% stake for AU$3 billion.
Oaktree’s Proposal Leads to a Rivalry With Blackstone, Crown Left to Decide on an Offer to Accept
After Oaktree made its own proposal to Crown, following Blackstone’s offer, this left the two companies battling for the casino. Quite a few investors did not approve of Blackstone’s strategy as they believe it undervalues Crown’s worth. Before the pandemic and the criticism by regulatory bodies, many were interested in investing in Crown’s shares.
Blackstone is known for other similar purchases of casino companies, making them more profitable by spinning off their property assets. According to Nathan Bell, Intelligent Investor’s portfolio manager, there is no reason why Crown cannot master the same strategy and help themselves boost their value.
Meanwhile, other investors question Oaktree’s offer as it seems the company is not willing to accept all elements of Crown’s business. Another assumption about Oaktree’s proposal is that it is willing to help Crown to gain a return much higher than the one of any regular shareholders.
As investors have different opinions about the two competing offers, it is still unclear which option Crown will go with. On Monday, in mid-session trading, Crown’s shares surged 0.5% trading at AU$11.97. This was in line with the predictions of most investors but surpassed Blackstone’s forecast for a price of AU$11.85 per share.
- Author
Olivia Cole
