Crown Mostly Dismisses Latest Blackstone Takeover Bid

The past two years were not good ones for Crown Resorts. Damning commissions and unsuitability findings were just some of the problems Crown encountered since the 2019 investigation by a group of news outlets. This year, the bids for Crown Resorts began coming in. But despite the acquisition attempts, including two from the US-based Blackstone Group, Crown has yet to find one for approval.

Rough Start to 2021

As 2020 exited and the calendar switched to 2021, most companies were still suffering the effects of the pandemic and its related business shutdowns. There was light at the end of the tunnel with vaccinations making their way around the world. While the pandemic-related hardships were far from over, most companies looked at the new year with hope.

Crown Resorts was in a turmoil all by itself, one of its own making.

The New South Wales report finally reared its head. And it was damning. One of the toughest outcomes was the recommendation by the NSW gambling watchdog – Independent Liquor and Gaming Authority (ILGA) – that Crown lose its Sydney gaming license. The findings of excessive influence on the company by shareholder James Packer prompted the resignation of the company’s CEO and a board director. And on top of it all, Western Australia readied its inquiry into Crown Resorts at the beginning of March.

Enter Blackstone, Round One

In mid-March, Blackstone Group issued an offer to buy Crown Resorts for $6.2B. Shareholders approved, as evidenced by a 20% increase in share prices upon the announcement of the offer.

Blackstone is an investment management company based in New York. It had recently grown to become one of the largest investors in leveraged buyouts. By 2020, Blackstone was managing assets worth approximately $619B.

Companies under the Blackstone umbrella ranged from travel websites and television networks to semiconductor manufacturers and biscuit producers. The company bought the Weather Channel and Busch Entertainment (part of Anheuser-Busch Brewing). Blackstone acquired companies in Germany and Spain, well beyond the confines of the US borders.

Within the past decade, Blackstone increased its holdings in the gambling world. In 2019, it acquired the Bellagio casino and resort in Las Vegas. And it then added Aria and Vdara, also from MGM Resorts, in July 2021. And Blackstone already held 10% of Crown stock. So, the bid for Crown Resorts was not unexpected or out of the dark.

Consideration and Competition

From the first mention of the bid, some of the most influential Crown investors balked at the price for being too low at $11.85 per share. While they understood it was an opening offer, some at the company were insulted.

On the other hand, Crown Resorts and its troubles and resulting intense scrutiny weren’t in an ideal situation to call the shots. And Packer said he was open to considering a deal. It didn’t hurt that Packer would walk away from the deal – at the opening bidding price – with nearly $3B.

And as Crown’s board of directors began to evaluate the proposal, Oaktree Capital Group entered the picture. Another American company, Oaktree is a private equity firm, an asset management company specializing in alternative investment strategies. This company invests in everything from fashion to food, from fitness clubs to oil tankers, and even a football club in France.

Oaktree brought a structured offer to the table, one that would help Crown purchase Packer’s 37% stake. The goal would be to help Crown make nice with regulators by getting rid of Packer and reupping the value of the company. However, Crown did not reveal the exact offer. The company only said that it would consider that proposal along with Blackstone’s.

Speaking of Blackstone, that firm increased its bid by several billion.

That wasn’t all. In mid-May, Star Entertainment submitted a proposal. Star has been a rival company to Crown, an Australian company that owns Queen’s Wharf Brisbane, Star Sydney and Star Gold Coast, and Treasury Brisbane. That bid offered $7B for Crown, as well as a promise to go cashless in all properties and end international junkets altogether. And the combined casino brand would become a massive force in the Asia Pacific region as well as one of the largest in the world.

Maybe This but Not That

Crown did some thinking and fully rejected Blackstone’s offer while requesting more information from Star. The thumbs-down to Blackstone was the result of Crown feeling undervalued and not given credit for the planned comeback in a post-pandemic era. The Star bid of A$9B, which equated to approximately A$14 per share, was worth more consideration.

Oaktree then reminded Crown that it was still interested by adding to its original offer. The new bid came with A$3.1B to help with the purchase of Packer’s shares. That amount included A$2B private loan, the rest converting into new shares.

However, by late August, Crown had ended talks with Oaktree. They gave no reason.

Blackstone is Back

Well into November, Crown heard a familiar knock at the door.

“Hello? Who’s knocking?”

“It’s Blackstone. Remember us from America? We’d like to talk again.”

“Slide the new bid under the door, and we’ll think about it.”

That new offer was $6.2B, approximately A$12.50 per share. The third bid from Blackstone pushed Crown shares up yet again, though Blackstone’s offer still exceeded that increased market price. Blackstone purposely matched Star’s bid, as it understood Crown’s interest in that one. In addition, this fresh offer came without the scandals that plagued Star.

Still Not Interested?

On December 1, Crown issued a statement that the offer. After discussing the Blackstone proposal with financial and legal advisers, shareholders, regulators, and even Blackstone’s advisors, Crown turned it all down. “The Crown board is of the view that the proposal does not represent compelling value for Crown shareholders.”

Even with that, the door remains ajar. Crown decided to offer Blackstone access to some private company information. The purpose is for Blackstone to see the potential of Crown and “formulate a revised proposal that adequately reflects the value of Crown.”

Officially, the Blackstone deal is on the table. Star has indicated that it might submit a new proposal but has yet to do so. Meanwhile, Oaktree has stayed out of the spotlight.

While the door is not completely closed, there is hope. Crown made sure to include a caveat in its proposal. “There is no certainty that the discussions between Crown and Blackstone will result in a revised proposal from Blackstone.”

Now, everyone waits. New ownership could be the fresh restart that the beleaguered company needs to overcome its hurdles.

 

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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