Blackstone makes third takeover bid for Crown Resorts
Private equity giant Blackstone has made a revised takeover bid for Crown Melbourne that has reignited the battle for control of the most prized casino in Crown’s portfolio.
The Age reports Blackstone’s $8.46 billion offer was announced on November 19.
Crown chief executive officer Steve McCann said Crown was considering the $12.50-per-share proposal from its second-largest shareholder, but talked up the group’s recovery following a damaging three years in which scandals and public inquiries threatened its casino licences in Melbourne, Sydney and Perth.
“We have a strong recovery plan, we are overhauling our culture and are on a pathway towards industry best practice governance and compliance,” Mr McCann said.
“There is no question these reforms represent fundamental changes that have strengthened and enhanced the value of our business.”
Crown’s shares jumped more than 16 per cent on the news, opening at $9.90 and closing at $11.54.
It is the third time Blackstone has made a play for Crown, and it is a 10 per cent owner of the company.
Crown rejected two previous offers from Blackstone
It made offers of $11.85 in March and $12.35 in May, which were both rejected by the Crown board.
The New York-based Blackstone’s new offer lands three weeks after Victoria’s royal commission ruled Crown should keep the keys to its flagship Melbourne casino, despite uncovering a string of “disgraceful” legal and ethical breaches that included infiltration by organised crime and an irresponsible approach to gambling addiction.
The potential of Crown to lose its Melbourne licence was a significant stock market issue.
It’s main rival, The Star Entertainment Group, lobbed a $12 billion merger proposal in May, but withdrew the offer, citing the uncertain outcome of ongoing royal commissions in Victoria and Western Australia.
A spokesman for The Star, which faces its own public inquiry over criminal infiltration in early 2022, said on Friday that it “remains open to exploring potential value-enhancing opportunities with Crown.
Billionaire media heir James Packer, who owns 37 per cent of Crown, will be a decisive figure in any takeover deal.
A spokesman for his private company, Consolidated Press Holdings, said it was aware of the new Blackstone offer and was “awaiting further announcements and details for consideration”.
Positive royal commission outcome in Melbourne buoys investors
Victoria’s royal commission recommended that Mr Packer be forced to sell his stake to below five per cent by September 2024 to address his detrimental influence over the company.
It is not known whether Blackstone’s new bid will be attractive to Mr Packer, however, at $12.50 it is closer to the $13 at which he agreed to sell a 20 per cent stake in Crown to Hong Kong casino group Melco in 2019.
Macquarie analyst David Fabris said there was more industry certainty following the positive outcome for Crown in Victoria’s royal commission and noted that the implied valuation of Blackstone’s bid was 32 per cent above its long-term trading range.
“That said, investors may see more value in Crown Resorts with more optimism around the domestic earnings outlook,” he said.
NSw suspended the casino licence for Crown’s new Sydney resort at Barangaroo in January following a damning public inquiry into its operations there and the licence is yet to be reinstated.
The Victorian royal commission found in October 2021 that the group was unfit to hold a licence, but allowed it to still operate its Melbourne casino under government supervision because it would inflict too much damage on the state to cancel it outright.
A WA royal commission into Crown Perth’s casino is set to report its findings in March 2022.
