lackstone Group on Monday offered to buy Crown Resorts in an A$8.02 billion ($6.2 billion) deal.
The New York-based private equity firm, which already owns 10% of Crown, bid A$11.85 a share in cash for the rest of the company, Crown said Monday. Crown is assessing the proposal and its stock soared 21% to A$11.97 at the close of trade in Sydney, indicating investors expect a higher bid or a rival suitor, Bloomberg reports.
The Sydney Morning Herald reports investors have dismissed the A$8 billion takeover bid as merely the opening gambit in a potential bidding war. Market sources told the local newspaper that attention will turn to Crown’s Sydney’s rival Star Entertainment, which could either lob a rival bid or partner with Blackstone to operate Crown’s casinos on the $US619 billion ($800 billion) American asset manager’s behalf.
Crown said its board had not yet formed a view on the proposal but would talk to “relevant stakeholders including regulatory authorities”.
If Blackstone’s takeover were to succeed, it would round out a portfolio of gambling-related assets from Las Vegas to Spain with resorts in three Australian cities. But it would also get a company in crisis after Crown lost its licence to operate a flagship new casino on Sydney’s waterfront last month amid allegations of money laundering and links to organised crime. It has lost about half its board including its CEO Ken Barton since the inquiry declared Crown unfit.
The company also faces inquiries in the other two Australian states where Crown is licensed to operate. A probe starts Wednesday into Crown’s suitability to run its Melbourne casino and a separate investigation into Crown Perth will also take place this year. That means Blackstone could be the new owner of a company that’s barred from operating its three Australian casinos, at least temporarily.
Australia’s financial crimes agency meanwhile is investigating Crown over money-laundering allegations, and the company faces two civil lawsuits accusing it of failing to disclose risks which led to share price declines.
Blackstone’s indicative offer was short of the stock’s trading levels before concerns about the coronavirus caused market gyrations in early 2020.
Company founder James Packer, the top shareholder with a 36% stake, would receive about A$2.9 billion from the deal. Packer sold out of casinos in Macau and the United States and began a series of attempts to take Crown private after 18 staff were jailed in China in 2016 for violating anti-gambling laws.
Among the conditions of the Blackstone proposal, the private equity firm itself would need to be found suitable to run a casino by Crown’s regulators. A spokesperson for the NSW Independent Liquor and Gaming Authority on Monday told Bloomberg the regulator was aware of the takeover approach, but is “not in a position to comment on any potential outcomes.”
Last week, Blackstone teamed up with Starwood Capital Group and struck a $6 billion deal for hotel operator Extended Stay America Inc. In 2019, Blackstone agreed to buy the Bellagio casino and resort in Las Vegas for $4.25 billion. Blackstone owns The Cosmopolitan, and the real estate assets of the MGM Grand, MGM Mandalay Bay. Blackstone has already cleared probity checks in Nevada which will be taken into account locally.