Crown seals Blackstone takeover terms

Crown Resorts has sealed the terms of its $8.9 billion takeover by global private equity group Blackstone.

The Guardian reports that Crown’s chair, Ziggy Switkowski, said the board unanimously recommended Blackstone’s offer, subject to certain conditions including that no better offer emerged.

Under the deal, Blackstone will buy all of the listed shares in Crown for $13.10 each.

This compares with a closing price of $12.39 on February 11, when it was valued at $8.4 billion.

“The all-cash offer provides shareholders with certainty of value,” Switkowski said.

The chief executive, Steve McCann, said the price reflected the value of Crown’s assets and its global reputation for premium service and experiences.

“The agreement with Blackstone also highlights the strength of the Crown brand and confidence in our future as we emerge from some challenging times,” he said.

Blackstone first approached Crown in March 2021, when it offered $11.85 a share.

The transaction is subject to approval by the Foreign Investment Review Board and the gaming regulator, pending receipt by the board of an independent expert report concluding the offer is in the best interests of shareholders.

James Packer’s Consolidated Press Holdings is the biggest shareholder with a 36.8 per cent stake.

Blackstone already has a stake of about 10 per cent.

Crown is due to release its first-half results on February 17.

Packer set for $3b payday

The Packer family’s decades-long ties to Crown Resorts are set to end, with the Blackstone deal to land the family a $3.3 billion pay day.

Forager Funds Management chief investment officer Steve Johnson said the Blackstone deal was “another step in a process that has some way to run”, citing regulatory and shareholder approval.

Despite Crown last trading at $13.10 a share in May 2019, before the NSW, Victorian and WA inquiries and COVID-19 slashed international high-roller revenue, Mr Johnson said the company was worth more delisted.

“Crown remains a high-quality and valuable asset and is worth more to private equity than it is ever going to be worth listed on the ASX,” Johnson said.

“They can use more leverage and financial engineering and they don’t have an environmental, social and governance discount applied,” Mr Johnson said in a note to investors.

But S&P Global Ratings analysts said the deal “heightened negative pressure” on the company’s credit rating.

“The offer, which is subject to a number of regulatory and other hurdles, could adversely affect the Australia-based gaming and entertainment group’s (BBB/Negative/A-2) credit quality, depending on the financing strategy employed by Blackstone,” wrote analysts Craig Parker and Paul Draffin.

“The Blackstone bid has introduced further uncertainty to Crown’s long-term business composition and financial position.

“Among the downside risks to Crown’s credit quality over the next two years are regulatory risks associated with the group’s gaming licences.

“The group also continues to face COVID-related disruptions and exposure to potential regulatory fines and sanctions arising from various regulatory reviews currently under way.”

The Blackstone deal comes after the Victorian royal commission into Crown recommended Mr Packer sell down his 37 per cent controlling stake in Crown to five per cent within two years.

For Mr Packer, the price is 10 cents higher than a failed deal that he struck with Macau billionaire, Lawrence Ho, who agreed to pay $13 for a 19,99 per cent holding of Crown in May 2019.

In other words, becoming a forced seller and seeing Crown’s shares plummet as low as $6.12 at the onset of the pandemic, Mr Packer has not only been able to save face but also secure a higher price than the failed deal with Mr Ho, with his 37 per cent shareholding worth $3.28 billion at the $13.10 offer price.

That additional 10 cents a share puts an extra $25 million in Mr Packer’s pocket.