Blackstone Increases Bid for Embattled Crown to $6.2 Billion
Blackstone Increases Offer for Embattled Crown to $6.2 Billion
(Bloomberg) -- Blackstone Group Inc. has increased its offer for Crown Resorts Ltd. to A$8.5 billion ($6.2 billion), betting it can rehabilitate the embattled casino owner which has been left reeling from a series of scandals that placed its future in doubt.
The U.S. buyout firm’s latest offer values Crown shares at A$12.50 each, a 26% premium to Thursday’s closing price. Crown, which rejected two previous bids as too low, hasn’t yet formed a view on the merits of the new proposal, it said in a statement Friday. The stock jumped 17% to A$11.55 in afternoon trading in Sydney.
Blackstone Makes Third Play for Crown’s Casinos: M&A Snapshot
Crown was last month given two years to address a litany of wrongdoing to save its flagship Melbourne casino after an inquiry found it had underpaid taxes, facilitated money laundering and exploited problem gamblers. In February, Crown was also found unsuitable to run its new casino in Sydney, which remains shut almost a year after its planned opening, while it faces a similar inquiry into its Perth operations.
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 as the country starts to reopen to domestic and international tourism after more than 18 months of pandemic restrictions.
Blackstone’s sweetened offer “shows the inherent value of these monopolistic assets which will serve as a tourism hub and revenue center,” said John Ayoub, a portfolio manager at Wilson Asset Management International in Sydney. “We welcome the bid but we expect to see potentially a raft of other offers to come together over the next six to 12 months.”
In July, rival Australian casino operator Star Entertainment Group Ltd. scrapped a merger proposal with Crown, while an offer from Oaktree Capital Management LP fund the buyout of billionaire James Packer’s stake also didn’t proceed.
A takeover would also offer a clean exit for Packer, who owns about 36% of Crown but has largely retreated from the corporate world in recent years to deal with mental health issues. The Melbourne casino inquiry had recommended Packer be required to sell down his stake to no more than 5% by September 2024.
Blackstone’s offer is conditional on being granted exclusive access to Crown’s books and a unanimous recommendation from Crown’s board should it proceed with a bid. It also needs final approval from the buyout firm’s investment committees.
Any acquisition of Crown would also be conditional on Blackstone receiving final approval from casino regulators in the three Australian states Crown operates in. Blackstone said it has engaged with the regulators, whose advisers have indicated there is “no reason to believe” approval wouldn’t be granted.
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