Crown board recommends Blackstone’s takeover offer
Crown Resorts will recommend shareholders accept US-private equity firm Blackstone’s $13.10 takeover offer.
The Australian Financial Review reports that sources close to Crown said the board signed a deal on February 14, after weeks of negotiations about the sale agreement and nearly one year after Blackstone made its first non-binding and indicative offer.
It is understood the deal was at $13.10 a share, in line with Blackstone’s most recent offer, was binding and would see the company acquired via a scheme of arrangement.
UBS and Gresham advised Crown.
The offer values Crown at close to $10 billion, including debt.
The deal is expected to be announced shortly.
It was Blackstone’s fourth offer. The private equity giant offered $11.85 March in 2021, before increasing to $12.35 and $12.50. It started due diligence in December.
It is not known whether James Packer’s Consolidated Press Holdings has agreed to accept the $13.10 a share offer, however it would have been nearly impossible for Crown’s board to sign the scheme of arrangement without his support.
CPH is Crown’s biggest shareholder with a 36.8 per cent stake.
A scheme of arrangement requires a shareholder vote and at least 75 per cent shareholder approval.
Blackstone is Crown’s second largest shareholder at 9.99 per cent, which was the most it could require without regulatory approvals.
Will Star come through with a late bid?
The only remaining question is whether Star Entertainment Group can dust off its offer.
Star lobbed a scrip-heavy offer to acquire Crown Resorts in 2021, and has maintained that it is still in the race.
The group had been seeking co-investors, including property funds, to team up for a joint bid.
However, Star’s task has come much harder in recent months, as the group prepares to face a regulatory inquiry in NSW.
It made an offer for Crown in May 2021, withdrew it in July and hasn’t been sighted since.
Its run now appears to have fallen flat.
Star’s inquiry will include public hearings that are due to start in March.
It is to be run by Adam Bell SC on behalf of NSW’s Independent Liquor and Gaming Authority.
At about $10 billion, Blackstone’s bid is the largest leveraged buyout in Australia in years. The group has a raft of banks lined up to provide debt finance.
Big banks ready to loan to Blackstone
It is understood the list of banks includes Morgan Stanley, Bank of America, Citigroup, Deutsche Bank, Goldman Sachs and JPMorgan, among others.
The talks involve bankers locally and offshore and Blackstone has them targeted at getting the best price and terms for the mooted offer.
It’s expected to shortlist the lending group, should its offer for Crown be successful.
Given the names involved, it wouldn’t surprise to see a US Term Loan B package in the works, where the investment banks would arrange and underwrite the loan before selling it to credit funds globally.
There’s likely to be restrictions on how much debt Blackstone could put into the acquisition vehicle, given gearing restrictions in Crown’s licences.
The financial syndicate is just one of the matters on Blackstone’s plate, as it seeks to lock down Crown.
The group bumped its offer to $13.10 a share on January 13, which was enough for Crown’s board to extend due diligence.
Blackstone’s also likely to have one eye looking over its shoulder.
The American suitor’s diligence is non-exclusive and Australian casino operator The Star Entertainment Group hasn’t given up its chase.
Star’s got its challenges, but also knows there’s a bucket load of potential synergies in putting the two businesses together.
