Australia’s Crown Resorts likely to back revised $6.5b Blackstone buyout offer

Photo: Crown Resorts

Australia’s biggest casino operator, Crown Resorts Ltd, said on Thursday its board was likely to back an improved A$8.87 billion ($6.46 billion) buyout proposal from U.S. private equity firm Blackstone Inc unless a higher offer emerged.

Crown received a higher non-binding offer of A$13.10 per share, a fourth from Blackstone whose previous bid of A$12.50 a share was deemed by Crown management as not “compelling.”

A person familiar with the matter told Reuters the near 5% price rise agreed after initial due diligence was supported by major investors, including James Packer, who collectively own around 60% of the stock. There were hopes a deal could be signed by the end of January, the person said.

Investment manager Perpetual, the third-largest shareholder with a 9.2% stake, said it was in favour of the revised proposal in the absence of a better offer.

Packer, who has a 37% stake, did not respond to a request for comment. Blackstone, which owns 9.9% of Crown, declined to comment. The person was not authorised to speak publicly on the matter and so declined to be identified.

Crown shares jumped as much as 9% to A$12.68 on Thursday morning, their highest level since June 4, but still well below Blackstone’s offer indicating market doubt about a rival bid.

The revised offer puts Blackstone in the box seat to win control of Crown, which has faced devastating misconduct inquiries in every state it operates in, plus protracted COVID-19 lockdowns.

Following the latest offer, the casino operator said it will engage with Blackstone on a non-exclusive basis and give the investment manager the opportunity to finalise due diligence.

Crown said if Blackstone makes a binding offer of at least A$13.10 per share and if there are no superior offers, its board intends to recommend shareholders vote in favour of the proposal.

“It is likely that a deal will get done,” said Steve Johnson, chief investment officer at Forager Funds Management, which owns Crown shares.

“The increase in offer price is a welcome step in the right direction and we are supportive of the board continuing a push for an appropriate firm offer for shareholders,” he said.

After an inquiry in July last year urged Crown be stripped of its gambling licence for its main Melbourne resort, Australia’s second-biggest casino operator Star Entertainment Group withdrew a A$9 billion buyout proposal.

However, Star has left open the possibility of re-entering the fray. In an emailed response to Reuters on Thursday, it reiterated it “remains open to exploring potential value-enhancing opportunities with Crown”.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.