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”.