Blackstone Offers $6.2 Billion for Embattled Crown Resorts

Posted on: March 21, 2021, 08:49h. 

Last updated on: March 22, 2021, 10:28h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Private equity titan Blackstone (NYSE:BX) is bidding $6.2 billion for controversy-laden Australian gaming operator Crown Resorts.

Crown Blackstone
Crown Resorts founder James Packer. Blackstone is offering $6.2 billion for his company. (Image: The Guardian)

Blackstone hasn’t publicly confirmed the overture. But the speculation surrounding the gaming company was enough to send Crown shares higher by more than 19 percent in Sydney’s Monday trading session.

The private equity company is offering $9.16 a share ($11.85 in local currency) for the casino operator — a 20.2 percent premium to where Crown shares closed last Friday.

Crown Resorts announced yesterday (Sunday) that it received an unsolicited, non-binding and indicative proposal from a company on behalf of funds managed and advised by the Blackstone Group and its affiliates to acquire all of the shares in Crown by way of a scheme of arrangement at an indicative price of A$11.85 cash per share,” according to a statement.

The proposed transaction is subject to an array of conditions. These include the buyer’s due diligence and ability to arrange debt financing, unanimous consent of Crown’s board of directors, approval by the suitor’s investment committees, and Blackstone winning approval from Australian regulators to run the targets integrated resorts in Sydney, Melbourne, and Perth.

Blackstone Offer Could End Long Crown Saga

Should the private equity firm ultimately acquire Crown, it could end what’s been a lengthy drama surrounding James Packer’s gaming company.

The casino operator is under intensifying regulatory scrutiny in its home market following a report by former New South Wales Supreme Court Judge Patricia Bergin on the company’s anti-money laundering failures. The Bergin Report, as it’s now known, sparked a parade of high-level departures from the firm and a ruling that Crown is unfit for licensing in New South Wales.

The state of Western Australia (WA), where Crown Perth Casino is located, is also examining the operator’s suitability to hold a gaming permit.

While the Bergin Report was considered a bombshell, Crown maintains investment-grade credit ratings, a strong balance sheet, and operates in a market that’s home to devoted gamblers and within decent proximity to China — all alluring traits for a suitor.

Crown was a target for Wynn Resorts (NASDAQ:WYNN) in 2019. But that deal was scrapped by the suitor after the Australian company prematurely disclosed the bid. The Las Vegas-based company offered $7.1 billion.

Blackstone Continues Gaming Push

Blackstone is one of several large private equity companies with gaming exposure. In fact, it already owns 10 percent of Crown – the second-largest stake, behind only Packer. Blackstone acquired those shares last April from Melco Resorts & Entertainment (NASDAQ:MLCO) at a deep discount.

The private equity firm also owns the Cosmopolitan Las Vegas, the real estate of Bellagio, and part of the property assets of Mandalay Bay and MGM Grand.

Blackstone may be beating rival suitors to the punch with Crown, as rumors surfaced in recent weeks that at least one US-based gaming firm may be mulling a run at the Australian company.

Crown said its board doesn’t yet have a view on the Blackstone proposal, and that it’s starting the process of evaluating the offer.