Blackstone’s $6.5 Billion Crown Resorts Bid Rejected as Too Low
(Bloomberg) -- Crown Resorts Ltd. rejected as too low an A$8.4 billion ($6.5 billion) takeover offer from Blackstone Group Inc., handing the advantage to rival suitor Star Entertainment Group Ltd.
Directors unanimously decided the U.S. buyout firm’s bid undervalued the company and there was uncertainty about the timing and regulatory approval for any deal, the Australian casino operator said Monday. Crown said it discussed the proposal, which had already been sweetened, with Blackstone, watchdogs and its own shareholders.
The dismissal of Blackstone -- for the time being -- puts Crown’s smaller competitor Star in the box seat to cement a union. Star last week proposed an all-stock merger with Crown that was underpinned by an ambitious plan to cut costs and generate value from real estate across the enlarged group.
While Crown said Monday it was yet to form a view on Star’s offer, it said it had asked its rival for more information to “better understand various preliminary matters.”
Crown stock climbed 0.1% to A$13.05 at 10:38 a.m. in Sydney, valuing the Melbourne-based company at A$8.8 billion. Shares of Star advanced 0.3% to A$4.07, giving it a market capitalization of A$3.9 billion.
Blackstone’s offer was A$12.35 per share in cash. Star said its proposal implied a potential value of A$14.00 per Crown share.
Crown became a takeover target after a tumultuous few years dating back to 2017, when a Shanghai court convicted 19 current and former staff of illegally promoting gambling on the mainland.
Most recently, a regulator in Australia in February said Crown was unfit to run gaming operations at its new A$2.2 billion Sydney resort after facilitating money laundering at its other properties.
An independent inquiry started public hearings on Monday into Crown’s suitability to run its flagship Melbourne casino in Victoria state.
The rejection of the Blackstone offer clouds the future for Crown’s biggest shareholder, billionaire James Packer. Packer has tried at least twice to sell up, and Blackstone’s proposal presented a potential clean exit.
Last month, Oaktree Capital Management LP also offered to help Crown purchase Packer’s stake.
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