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Blackstone submits Aus$8.02bn acquisition offer for Crown Resorts

| By Robert Fletcher
Private equity group Blackstone Group has put forward an offer of AUS$8.02bn (£4.47bn/€5.21bn/US$6.19bn) to acquire the remaining shares in Australian integrated resort operator Crown Resorts.

Blackstone has offered Aus$11.85 for each share in Crown for 90.1% of shares it does not currently own.

Crown said it is yet to fully review the proposal and has launched an assessment of the offer, during which it will engage with relevant stakeholders, including regulatory authorities.

The operator added that its shareholders do not need to take any action at this stage, saying there is no guarantee the offer will result in a transaction.

Crown has appointed UBS as financial adviser and Allens as legal adviser for the acquisition proposal.

The private equity group already owns a 9.99% holding in Crown, having acquired the stake from Asian gaming giant Melco Resorts & Entertainment Limited in April 2020, at a price of $8.15 per share.

Melco had originally agreed to purchase a 19.99% stake in CPH Crown Holdings in May 2019 for approximately $1.76bn. With the deal to be conducted in two tranches, Melco purchased an initial 9.99% stake soon after it was agreed.

However, the deal gave rise to allegations about the businesses in the Australian press, which led to the New South Wales Independent Liquor & Gaming Authority launching an inquiry into Crown.

The inquiry was intended to examine whether Crown was a “suitable” licensee for a new integrated resort at Barangaroo in Sydney, and if not, what changes would be required to make it suitable.

The Authority also looked into whether Melco was suitable for its status as a close associate and whether the deal was a breach of the Barangaroo licence.

Shortly after the inquiry began, Melco delayed purchasing the second tranche of shares in Crown, then ultimately pulled out, selling the stake that it had already purchased to Blackstone.

The inquiry went on to find evidence of money laundering, both through the accounts of subsidiaries owned by Crown and at Crown’s own facilities.

Owner James Packer was also found to have undue influence on the business given he was not a director, including personally agreeing and executing the sale to Melco without approval from the board. As such, directors were unable to ensure the deal was not in breach of Crown’s Barangaroo licence.

The inquiry concluded that the evidence regarding money laundering alone was enough to determine that Crown was not a suitable holder of the Barangaroo licence.

However, it may still be permitted to operate the venue if it institutes certain changes.

Recommendations put forward by the Authority included that Crown continue to avoid dealing with junkets unless they are licensed by the Authority, while Packer should stop “remote manoeuvring”, referring to his practice of effectively running the company despite not sitting on the Crown board.

In addition, it was advised that Crown’s board be restructured.

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