At the beginning of 2022, Australia’s iconic Crown Resorts agreed to the terms of a takeover by Blackstone, a private equity group that had its first Crown Resorts’ acquisition attempt in March 2021, at a price of $11.85 a share. Now, Blackstone is getting ready to pay $13.10 per share or a total of AU$8.9 billion (US$6.3 billion) for the takeover of the Australian gaming giant.
Crown Resorts’ chair Ziggy Switkowski stated the group’s board unanimously favored the offer made by Blackstone, while also mentioning a series of conditions for the takeover to go through, including the lack of a better offer in the near future.
The Battle for Crown Resorts: Blackstone vs Star Entertainment vs Oaktree Capital Management
As mentioned before, the $6.3 billion offer is not Blackstone’s first try to take over Australia’s largest and most popular entertainment group that owns and manages premier integrated resorts like Crown Perth, Crown Melbourne, Crown Sydney in Australia, and Crown Aspinalls in the UK.
Blackstone, which already owns approximately 10% of Crown’s stakes, made three other previous attempts to take over Crown, with a third one at the end of 2021 that was overshadowed by the active interest shown by bids from other investors, including Star Entertainment and Oaktree Capital Group.
Blackstone’s second bid was in May and its first bid was made in March for a value of $11.85. Star Entertainment Group joined Blackstone in the bidding war for the reputable Australian group in 2021 with three different bidding offers. The group also made a Crown-Star merger proposal instead of the standard takeover. However, Blackstone’s fourth bid seems to be the big winner, in spite of some voices expecting Star to jump back into the bidding action with a new and sweetened deal.
Blackstone’s Bid Is Supported by Important Investors
As a global leader in the field of investments working with individuals, pension funds, and large institutions, Blackstone specializes in generating investor value in the long run. Its expertise with investments across a plethora of asset classes ranging from real estate, private equity, infrastructure, hedge funds, or credit allows it to support local communities while creating impressive capital growth numbers.
Blackstone’s acquisition has the support of a number of important investors such as Ben Clark, a Crown bondholder and also TMS Capital’s portfolio manager. Consolidated Press Holdings owned by James Packer is Crown’s largest shareholder with 36.8%. Accordingly, his vote is of high importance for the new bid to obtain the mandatory 75% threshold that would grant its approval. Packer is no longer part of Crown Resorts’ board and he would collect approximately $3.3 billion as per the terms of the Blackstone agreement.
The Proposed Bid Is a Reflection of Crown Resorts’ Value
Crown’s chair stated that shareholders should expect certainty of value due to Blackstone’s exclusive cash-only offer. Chief executive Steve McCann added the proposed price was a good expression of the group’s asset value and reputation at a worldwide level. The Blackstone agreement is also a reflection of Crown’s strength and confidence in the group’s outlook for the upcoming years.
The agreement is still pending approval from the Foreign Investment Review Board as well as Australia’s gaming regulator. The deal should also be given the green light via a receipt issued by an independent report by experts that would conclude the bid would represent shareholders’ best interests.
Blackstone added a series of requirements that would be included in the agreement’s terms, including Crown having to grant US-based Blackstone exclusive access to all of its financial data.
Crown Melbourne to Be Operated by Independent Executives
In an attempt to guarantee positive outcomes for the local economy in Victoria, the state’s gambling watch signed a deal with Crown Resorts. The agreement is that Crown’s flagship casino Crown Melbourne will be operated by local and independent executives. In return, Victoria’s gaming regulations should be better imposed and applied.
A change brought to the structure of Crown’s ownership would help the group take an important step toward tackling the regulatory issues that it has been subject to in the past few years. If the agreement receives the green light from all parties involved during June’s shareholders’ meeting, the takeover would redefine the gambling market in the country.