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Crown board: Blackstone bid lets shareholders escape regulatory uncertainty

| By Marese O'Hagan
The board of Crown Resorts has urged shareholders to back Blackstone's proposed acquisition of the company, noting that selling would let shareholders avoid “the uncertainties and risks” of the business.

The comments came in a scheme document released ahead Crown’s meeting in which shareholders vote on the deal. The document contains a number of reasons why shareholders may wish to vote for or against the acquisition.

The board outlined that the multiples implied by Crown’s valuation are reasonable when compared to market competitors.

The Blackstone bid prices Crown at AUS$13.10 (£7.48/€8.81/$9.84) per Crown share. In the document, the board noted that the revenue multiple of this deal will match those of other casino operators across Australia and the US. It would also be more than casinos in New Zealand, Macau and Singapore.

The document goes on to state that the all-cash scheme consideration of AUS$13.10 per share “provides certainty of value” for shareholders’ investment and avoids “the uncertainties and risks associated with an ongoing investment in the Crown business or assets”.

“If the scheme does not proceed, the amount which Crown shareholders will be able to realise in terms of price and future dividends will necessarily be uncertain and subject to a number of risks,” it continued.

It said that these risks could relate to the future regulation of the business in each of the three Australian states in which Crown operates a resort, the business has come under recent scrutiny, with reviews in New South WalesVictoria and most recently Western Australia all finding Crown “unsuitable” for a gaming licence.

The reviews all found evidence of money laundering and links to junkets with ties to organised crime at the operator’s resorts, as well as questioning Crown’s management structure.

However, all three inquiries into Crown said the operator would still be permitted to operate its casino if it underwent certain changes.

For why shareholders may wish to vote against the scheme, the document states several examples – such as that shareholders may disagree with the independent expert’s assessment, or that they may wish to take part in future Crown financial decisions.

In order for the scheme to pass, 75% of all votes cast must be in its favour.

Yesterday (29 March) Blackstone received several key approvals relating to its acquisition of Crown Resorts.

Crown also noted that an independent expert concluded that the acquisition is fair, and in Crown shareholders’ best interests.

The expert’s report, which was prepared by Grant Samuel and Associates Pty Limited, found that the acquisition bid is the highest secured in an open competitive environment.

Blackstone first submitted a proposal to acquire Crown last year, at a bid of AUS$8.02bn (£4.47bn/€5.21bn/US$6.19bn).

This was rejected and the bid was raised to AUS$8.87bn. This was then unanimously approved by Crown’s board.

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