Earlier today, Crown Resorts revealed that it gave the nod to the AU$8.9-billion acquisition proposed by Blackstone Inc. The decision of the Australian gambling giant comes roughly about a year after the US private-equity firm has first approached it with some takeover talks.
The company’s shareholders are expected to vote on the proposed Blackstone acquisition, which is estimated at AU$13.10 a share in cash for Crown Resorts, in the second quarter of 2022. The deal will also have to get the approval of local gambling regulatory bodies.
Apart from its gambling footprint in other countries, the US private-equity firm already holds a stake of almost 10% in Crown Resorts. Blackstone first offered to take over the Australian gambling giant in March 2021, with its initial acquisition offer estimating the company at AU$11.85. Since then, the acquisition offer has been raised several times, with a bidding war for the assets of the struggling casino company erupting at the time when the major Australian rival of Crown Resorts, Star Entertainment Group, tabled an acquisition bid. At a later stage, Star Entertainment withdrew from the competition.
The senior managing director and head of real estate at Blackstone Australia, Chris Tynan, noted that Crown Resorts plays an extremely important role in the economy of Australia because of the big investments, the large number of jobs created, and the attraction of both local and foreign visitors to the country. The US private-equity firm’s representative shared that Blackstone’s team was excited for the opportunity to bring its global hospitality, gaming experience and local expertise to contribute to the post-pandemic recovery of the country.
Blackstone Deal Comes at a Challenging Period for Crown Resorts
According to Crown Resorts, the acquisition deal offered by Blackstone Inc. provides its shareholders with certainty at a time when the company has been facing thorough investigations by local regulators and has been endangered by having its casino operating licences taken away. The probe carried out into the company’s operations by the regulators in the state of Western Australia is still ongoing, with a final report set to be tabled in March.
The regulatory inquiry has resulted in the delay of the much-expected opening of Crown Resorts’ new casino in Sydney’s waterfront Barangaroo area, as the gambling giant was found unfit to hold the operating licence for the venue without bringing some significant changes to the way it operates its services. As Casino Guardian reported at the time, the investigation found that Crown Resorts has facilitated money laundering activities and that the company partnered with Asian junket operators to bring foreign affluent gamblers to its domestic market casinos.
Furthermore, the investigation carried out by the Victorian Royal Commission found that the Australian gambling giant engaged in dishonest and illegal activities, so it was not suitable to operate a casino. Still, the authorities decided to give Crown Resorts a chance because the potential closure of its Melbourne casino would have extremely negative economic consequences for the region.
James Packer’s Era in Crown Resorts Seems to Be Coming to an End
Since the beginning of the investigations into its operations, Crown Resorts has faced an overhaul in its leadership, with Chairman Ziggy Switkowski estimating great progress in the way the company has addressed the regulatory issues and the negative effects faced as a result of the lockdowns and travel restrictions associated with the coronavirus pandemic. Mr Switkowski, however, noted there was still uncertainty for the company and explained that the Blackstone acquisition deal is considered a positive outcome for the company’s shareholders.
Steven McCann, who has been in the Chief Executive Officer’s position for less than a year, shared that the Blackstone deal emphasises the strength of Crown Resorts’ brand and the positive expectations for the company’s future as it emerges from challenging times.
So far, Crown Resorts has mostly been associated with the Australian billionaire James Packer, who holds a 37% stake in the operator through his investment company Consolidated Press Holdings (CPH). Previously, Mr Packer was part of the company’s Board of Directors but decided to step down after facing some criticism for having too much control over the gambling company’s operations. In 2021, Consolidated Press Holdings shared that it was ready to consider any potential transaction for Crown Resorts’ assets but a representative of the company has refused to comment on the Blackstone takeover deal.
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Olivia Cole
