Posted on: January 13, 2022, 06:40h.
Last updated on: January 13, 2022, 01:23h.
Crown Resorts informed shareholders yesterday that it will consider — and likely recommend accepting — a new offer from private equity giant Blackstone Group. The bid to acquire the casino company’s assets is for A$8.87 billion (US$6.48 billion).
Blackstone’s nearly $6.5 billion pitch for Crown is the investment firm’s fourth play for the Australian casino giant. The latest submission represents A$13.10 per share, a A$0.60 increase on the A$12.50 proposal Blackstone suggested in mid-November.
Following consideration of the Revised Proposal, including obtaining advice from its financial and legal advisers, the Crown Board considers that it is in the interests of Crown’s shareholders to engage further with Blackstone on a non-exclusive basis in relation to the Revised Proposal,” a statement from the Crown board said.
The board says it will give Blackstone the opportunity to finalize its due diligence by further providing the detailed and private information of the company’s inner dealings. That will allow Blackstone to present Crown with a binding offer.
“Should Blackstone make a binding offer at a price of no less than A$13.10 cash per share … it is the Crown Board’s current unanimous intention to recommend that shareholders vote in favor of the proposal.”
Packer Sent Packing
Crown Resorts is the gaming and hospitality empire of billionaire James Packer. The Aussie businessman inherited much of his wealth through his family’s Consolidated Press Holdings (CPH) media conglomerate.
Packer took an interest in the gaming industry and founded Crown Resorts in 2007. Partnering with Hong Kong billionaire Lawrence Ho and his Melco Resorts, an entity called Melco Crown allowed Packer’s group to become invested in Macau, the world’s richest gaming market.
Ho and Packer had a falling out, however, largely because of Crown Resorts in 2016 sending employees to China to advertise gaming trips. Such marketing in mainland China is illegal. The incident led to multiple Crown employees being detained, with some charged and imprisoned. Former Crown VIP exec Jason O’Connor spent 18 months in a Shanghai prison for committing “gambling crimes.”
Melco bought out Crown’s stake in Melco Crown in 2016. Packer resigned as Crown Resorts chairman in 2018, citing mental health issues.
James Packer — through Consolidated Press — maintains a 37 percent ownership position in Crown Resorts. Despite having no official capacity with the company he founded, last year regulators in New South Wales (NSW) conducting a probe into whether Crown is suitable to hold a gaming license concluded that Packer had unjust influence and control over the organization.
Crown was deemed unsuitable in NSW to conduct casino operations at its $1.6 billion Crown Sydney, which opened in December of 2020 as a non-gaming luxury resort and residential complex. A separate but similar inquiry in Victoria also found Crown unqualified to continue running its Crown Melbourne casino — currently the company’s most critical revenue-generating asset.
Despite the findings, Victoria regulators allowed Crown to maintain its casino license for its Melbourne casino resort. But the company must overhaul its governance and how it does business in the state. Crown is also working to appease concerns presented in the NSW review in hopes of opening its Sydney casino later this year.
A third review continues in Western Australia to determine if Crown is suitable to continue operating Crown Perth.
New ownership would likely appease many grievances raised by regulators in the Australian jurisdictions where the Crown has been scrutinized.