Crown Resorts to Consider Offer from Blackstone Group
The private equity group Blackstone Group (NYSE: BX) has made an offer of AUS$8.02 billion for the remaining shares in Australian integrated resort operator Crown Resorts (ASX: CWN). The group has offered AUS$11.85 for each of the 90.1% of shares it does not currently own.
Crown has launched an assessment of the offer and said it is yet to review the proposal fully. The assessment will see it engage with the relevant stakeholders and regulatory authorities. At this point, there is no need for any action from its shareholders and there is no guarantee that the offer will result in a transaction.
The Blackstone Group owns 9.99% of Crown, having acquired it from the Asian gaming giant Melco Resorts & Entertainment Limited (NASDAQ: MLCO) in April 2020 for $8.15 per share.
In May 2019, Melco agreed to purchase a 19.99% stake in CPH Crown Holdings for roughly $1.76 billion. The deal was due to be conducted in two tranches and Melco purchases the initial 9.99% soon after. However, the deal resulted in allegations in the Australian press, which resulted in the New South Wales Independent Liquor & Gaming Authority starting an enquiry into Crown.
The inquiry was to look at whether Crown was a “suitable” license for a new integrated resort at Barangaroo in Sydney and if not, what changes were required. It also examined whether Melco was suitable as a close associate and whether the deal was in keeping with the terms of the Barangaro license.
Once the inquiry begun, Melco delayed the second half of its purchase of Crown shares and then ultimately pulled out and sold its shares to Blackstone. The inquiry found evidence of money laundering through the accounts of subsidiaries owned by Crown and at Crown’s own venues.
The inquiry also found that James Packer had too much influence on the business considering that he was not a director, and he agreed the sale to Melco without approval from the board. Because of this, directors were not able to ensure that the deal did not breach the terms of Crown’s Barangaroo license.
However, Crown may still be able to operate the Barangaroo venue if it makes certain changes. It has been recommended that it stops dealing with junkets that are not approved by the Authority and that Packer should stop trying to run the company without sitting on the board. It was also recommended that the board be restructured.
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