Crown Resorts Finally Accepts Blackstone Bid For A$9b

It was not an easy road for Crown Resorts or for Blackstone Group. There were offers, declinations, and attempts by other companies to hone in on Crown. But in the end, Blackstone submitted a new offer in January 2022 that Crown decided to consider. About one month later, Crown did accept it. And it did so on Valentine’s Day.

Try and Try and Try Again

It has been nearly one year since the US-based investment management group first submitted a takeover bid for Crown Resorts. But persistence paid off for Blackstone Group, as it finally put something on the table that Crown decided to accept.

The first bid went to Crown in March 2021. Blackstone offered $6.2B, which valued shares at $11.85. Analysts, shareholders, and Crown’s competition all believed the offer was too low, despite the constant barrage of regulatory troubles and punishments. But others stepped in with counteroffers in the months that followed. Oaktree Capital Group from the United States made a bid, as did Star Entertainment. Oaktree even countered Star’s bid. But by August 2021, Crown had declined all of them.

In November of last year, Blackstone submitted another bid, that one for $12.50 per share. But Blackstone wanted to take a look at Crown’s financials. While Crown did open its books, it did so in order to elicit a higher bid. The Crown Board of Directors declined the $12.50/share bid, saying that it was not a “compelling value for Crown shareholders.”

New Year, New Offer

After the start of the new year, Blackstone sent in one more bid. It put the stock buyout price at $13.10 per share. That valued the entire deal at A$8.9B, the equivalent of US$6.5B. It would purchase all of James Packer’s holdings – currently 37% of Crown Resorts – and give Packer approximately A$3B for them.

On 13 January, Crown reported that its Board of Directors urged shareholders to “engage further with Blackstone on a non-exclusive basis in relation to the revised proposal.” The Board was unanimous in that advice. So, Crown did decide to do just that. The company asked Blackstone to finalize its due diligence inquiries and put forth a binding offer.

Shares of Crown initially rose to A$12.64 on the news. However, as days turned to weeks with no further news, stock prices fell again. They hit $11.99 on 25 January and ended the month at $12.02. The first two weeks of February saw the prices fluctuate from $12.61 to $12.27.

Happy Valentine’s Day

On 14 January, Crown Resorts suddenly paused trading “pending a further announcement.” And then the company announced that it entered into a “scheme implementation deed” with Blackstone.

Per this deed/agreement, Crown shareholders will receive A$13.10 per share. That represents a premium of c.32% to the closing price of $9.90 per share on 18 November 2021. They chose that date because it was the last trading day before it received the $12.50/share bid from Blackstone.

In total, the deal values Crown at A8.9B – approximately US$6.5M – which is an increase over the equivy value of $845M or $11.85/share that Blackstone initially offered in March 2021.

Crown’s Board of Directors unanimously recommended that shareholders approve the transaction. This will be subject to an independent expert concluding that the scheme is in the best interests of said shareholders. Board Chairman Ziggy Switkowski commented that it fulfilled its commitment of maximizing value for shareholders.

Switkowski said, “The Crown Board and management have made good progress in addressing a number of significant challenges and issues emerging from the Covid-19 pandemic and various regulatory processes. Nevertheless, uncertainty remains and having regard to those circumstances and the underlying value of Crown we believe the Blackstone transaction represents an attractive outcome for shareholders. The all-cash offer provides shareholders with certainty of value.”

Crown Managing Director and CEO Steve McCann called the offer a compelling one. He noted that it reflects Crown’s “world-class assets and global reputation for premium service and experiences.” He added that the company is emerging from “some challenging times” but that the brand is strong.

On the news, shares jumped to A$12.66.

Next Steps

As mentioned, an independent expert must conclude that the arrangement is in the best interest of shareholders. That expert, announced as Grant Samuel & Associates Pty Ltd, must issue a report for the consideration of the Board and shareholders.

From there, they will await other approvals:

  • Australia’s Foreign Investment Review Board (FIRB)
  • Regulatory bodies in New South Wales, Victoria, and Western Australia
  • Governmental counterparts to framework agreements
  • James Packer

Per the implementation deed, Crown must not shop around for another deal, talk about this deal, or otherwise violate the agreement. Should Crown do this, they will pay a break fee of $89M.

Crown will send an explanatory document to Crown shareholders sometime in March of April. The date depends upon the submission of the independent expert’s report, which will accompany the document. After sufficient time for shareholders to review, Crown will set a scheme meeting in the second quarter of the 2022 calendar year.

Blackstone and Crown will finalize the deal after that meeting, if all approvals allow it.

 

 

Rose Varrelli avatar
Rose Varrelli
Senior Casino & News Writer

Hi there! I’m Rose, and with nine years behind me in the iGaming industry, I craft engaging narratives at CasinoAus. My education in Communication across Europe has sharpened my skills in fintech, casino legislation, and digital marketing. Backed by a strong foundation in SEO, storytelling, and cross-cultural communication, I’m passionate about creating content that resonates globally and educates our audience.

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