Crown Requests More Details About Star Bid
Crown Resorts (ASX: CWN) has rejected a revised takeover bid from the private equity firm Blackstone Group (NYSE: BX), and it said that it believes the offer undervalues the business. However, at the same time, the company has requested more information from rival Star Entertainment about their bid.
Last week, Blackstone made an offer of AUS$12.35 in cash per Crown share, which was a 4% increase on the offer made in March. Other clauses from the original offer remained, such as the cancellation of the deal if either of Crown’s existing licenses were suspended or if it does not receive a New South Wales license.
However, the company board unanimously decided that the new offer undervalues the business and that it would not be in the best interest of shareholders. The board was also concerned about the clause relating to regulatory approval, saying that there is “significant uncertainty” regarding the timing and outcome of these processes.
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At the same time, Crown provided an update on the proposal put forward by rival land-based operator Star last week. Star has proposed merging with Crown and creating a combined operation that would be worth roughly AUS$12 billion.
The proposal set out a share exchange ratio of 2.68 Star shares for every Crown share, which values the Crown shares at $14 each. Crown shareholders would also be offered a cash alternative of $12.50 per share up to a maximum of 25% of Crown’s issued share capital.
If the proposal were to go through, then the new operation would be 59% owned by Crown shareholders and 41% by Star shareholders. Crown said that its board is still to form a view on the proposal but it has requested further information from Star.
The update from Crown came after its Melbourne division was ordered to pay $22.5 million as part of measures set out by the New South Wales Independent Liquor and Gaming Authority (IGLA). The company must pay $12.5 million towards the inquiry and pay an annual Casino Supervisory Levy of $5.0 million in both FY2021 and FY2022.
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