Blackstone Increases Its Crown Resorts Takeover Bid to $6.5 Billion

(Bloomberg) -- U.S. private equity giant Blackstone Inc. moved closer to triumphing in its almost yearlong pursuit of troubled Australian casino operator Crown Resorts Ltd. after sweetening its offer a third time to A$8.9 billion ($6.5 billion).

The buyout firm, which already owns 10% of Crown, lifted its bid to A$13.10 per share, from a November offer of A$12.50, the Melbourne-based casino company said in a statement Thursday. Crown shares rose 8.7% to A$12.64 in early afternoon trading in Sydney after closing at A$11.63 on Wednesday.

Crown said it will now engage with Blackstone, and will recommend shareholders accept the bid if a binding offer of at least A$13.10 a share is made. A deal would end a sorry chapter in Crown’s history after it was found unsuitable to run its Sydney casino and given two years to address a litany of wrongdoing at its flagship Melbourne casino, including facilitating money laundering and underpaying taxes. 

Crown Resorts Set to Back Sweetened Blackstone Bid: M&A Snapshot

Nonetheless, if Blackstone can reform Crown and appease regulators, the prize is clear: casino monopolies in two Australian cities and a gleaming A$2.2 billion resort on Sydney’s waterfront.  

“Crown remains a high-quality and valuable asset and is worth more to private equity than it is ever going to be worth listed,” said Steve Johnson, chief investment officer at Forager Funds Management in Sydney, which owns Crown shares. “The increase in offer price is a welcome step and we are supportive of the board continuing a push for an appropriate firm offer.” 

An agreement to sell to Blackstone would also offer Crown’s biggest shareholder, billionaire James Packer, a clean exit from a company that was once synonymous with his family name. Packer, who owns about 36% of Crown, has largely retreated from corporate life in recent years to deal with mental health issues.

Crown’s gambling operations began to unravel with a crackdown by authorities in mainland China in late 2016, leading to the arrest and conviction of more than a dozen employees. By the end of that year, Crown had scrapped a spinoff of its international assets, including a stake in Macau casino operator Melco Resorts & Entertainment Ltd., and started a retreat to Australia.

Blackstone made its first approach for Crown in March last year, with an initial offer of A$11.85. That and a subsequent offer in May were rejected as two low. In July, rival Australian casino operator Star Entertainment Group Ltd. scrapped a merger proposal with Crown, while an offer from Oaktree Capital Management LP to fund the buyout of Packer’s stake also didn’t proceed.

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