Australia

Crown rejects Blackstone's third takeover bid, seeks to raise the $6.2B offer

Crown Melbourne casino resort in Australia.
2021-12-02
Australia
Reading time 1:45 min

Crown Resorts has rejected the third takeover bid from Blackstone but will open its books to the private equity giant in the hope that they will increase its A$ 8.46 billion (USD 6.2B).

The James Packer-backed casino giant said Thursday morning that Blackstone’s bid of US$ 12.50 per share bid received fourteen days ago “does not represent compelling value for Crown shareholders.”

“However, the Crown Board has offered Blackstone the opportunity to access non-public information to allow Blackstone to undertake initial due diligence inquiries on a non-exclusive basis so that it can formulate a revised proposal that adequately reflects the value of Crown,” the company said in an ASX statement, as reported by The Sydney Morning Herald.

Crown has also denied Blackstone an exclusive look at its books, leaving the door open for other suitors, such as Sydney casino outfit The Star Entertainment Group, to lob rival bids.

Blackstone, headquartered in New York, already owns 10% of Crown and has been courting the casino operator for months. It raised its first takeover offer at $11.85 a share in March and increased that to $12.35 in May, but Crown said both were too low.

However, Blackstone is now dealing with a different leadership team at Crown, following the departure of former executive chairman Helen Coonan. Former Telstra and Optus boss Ziggy Switkowski officially took over as chairman on Wednesday after receiving clearance from state gambling regulators, joining Lendlease boss Steve McCann who joined the company in June.

Crown shares closed at $10.94 on Wednesday and were trading just under $10 before Blackstone’s latest offering was revealed last month. They closed Thursday’s session at $11.02.

Star Entertainment Group, which owns casinos in Sydney, Brisbane, and the Gold Coast, is also interested in taking control of Crown and submitted a merger offer in May this year.

It withdrew the offer, however, when there seemed to be a real chance the Crown’s Royal Victoria Commission would recommend losing the Melbourne flagship casino’s license.

The royal commission found Crown was unfit to run a casino in light of a string of “disgraceful” legal and ethical breaches but recommended it kept its license because canceling it would be too harmful to Victoria’s economy and Crown Melbourne’s 11,500 employees.

NSW suspended Crown’s gaming license for its new Barangaroo resort in January after an independent inquiry found it was unfit to run a casino. Crown is working to satisfy the NSW gambling regulator it has reformed itself enough to have the license reinstated.

A royal commission in WA into Crown Perth is set to report its findings in March next year.

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