Blackstone makes fresh acquisitive Crown Resorts play
Blackstone Group has revived its interest in embattled Australian casino operator Crown Resorts, returning with an offer of A$12.50 per share which values the company at A8.5bn ($6.2bn).
This proposal follows a pair of prior overtures made by the US investment management firm, and affiliates, earlier in the year, which valued the group at A$12.35 per share after an initial A$11.85 offer was deemed an undervaluation and “not in the best interests” of shareholders.
Crown has stated that it has “not yet formed a view on the merits of the proposal,” adding that it will now assess the submission, with regards to the value, terms, and other considerations; as well as engaging relevant stakeholders, including regulatory authorities.
“Crown shareholders do not need to take any action in relation to the proposal at this stage. There is no certainty that the proposal will result in a transaction,” the company states.
The proposal, Blackstone says, is subject to an array of conditions, including the group conducting due diligence on Crown, covering regulatory, commercial, operational, financial, taxation, legal and accounting matters, on an exclusive basis.
The group will also require the receipt of final approval from its investment committees, a unanimous Crown board recommendation and a commitment from all Crown directors to vote in favour of the Proposal.
Furthermore, any potential acquisition of Crown would also be dependent on Blackstone receiving final approval from the casino regulators in each of Victoria, New South Wales and Western Australia.
Blackstone has also stated that it has “engaged with the regulators in relation to this issue,” and that their advisers have indicated that there is no reason to believe that an approval would not be realised.
The company is also said to be prepared to proceed with the proposed transaction amid an ongoing Perth royal commission and consultation process with the NSW Independent Liquor & Gaming Authority, in addition to legislation to implement the recommendations of the Victorian Commission having yet to be finalised or passed, or the current AUSTRAC investigations being completed.
However, it is noted that “the consequences or outcomes of these processes may impact the proposed transaction”.
Last month, Crown Resorts retained its Melbourne casino licence, despite a royal commission deeming the group to be “unsuitable” on the basis that it engaged in “illegal, dishonest, unethical and exploitative” conduct.
The launch of a royal commission came after a scathing report in New South Wales, commissioned by the ILGA and led by former supreme Court judge Patricia Bergin, found that the company isn’t fit to operate the $2.2bn Crown Sydney Hotel Resort.
The almost 800-page critique of Crown’s suitability, which itself followed allegations raised by Australia’s Nine Network, the Sydney Morning Herald, The Age and other media outlets, alleged that Crown, or its agents, affiliates or subsidiaries, engaged in money-laundering; breached gambling laws; and partnered with junket operators with links to drug traffickers, money launderers, human traffickers, and organised crime groups.
A short time after Victoria initiated its investigation, Western Australia upgraded its own inquiry to a royal commission, which it said will also look at the state’s regulatory framework, including any actual or perceived conflicts of interest by officers involved in casino regulation, and any matters that might enhance the Gaming and Wagering Commission’s future capability and effectiveness.