Blackstone sweetens offer for Australia's Crown Resorts
The Blackstone Group has improved its take-private offer for Crown Resorts, valuing the Australian casino operator at about A$8.3 billion ($6.5 billion).
The private equity firm is now willing to pay A$12.35 per share in cash for the company compared to a $11.85-per-share offer in March. The stock jumped almost 8% following the announcement and closed at A$13.00 on May 10, giving Crown a market capitalization of A$8.8 billion.
It coincides with submission of a scrip bid of A$14 per share from fellow Australia-listed gaming business Star Entertainment Group. Star made a cash offer of A$12.50 per share for up to 25% of the company. Star, which operates casinos in New South Wales and Queensland, claimed a merger between the two companies would establish an entity worth A$12 billion.
Crown also received an offer last month from Oaktree Capital Management to acquire a 37% stake for A$3 billion. This proposal valued the company at around A$12 per share. Crown has not formed a view on any of the offers.
According to a filing, Blackstone’s revised bid will retain the key terms of the previous offer. In addition to regulatory confirmation, the requirements include confirmation that Crown will be able to continue gaming-related operations in Sydney, Melbourne, and Perth. It comes as Crown faces several investigations related to money laundering allegations.
In October last year, Crown became the subject of an investigation by Austrac, a national financial crimes agency, for possible breaches of anti-money laundering and counterterrorism financing rules. This has been tied to VIP gamblers brought in by junket operators in China. Crown has since said it would cease dealing with junket operators.
There are also class actions and state investigations related to money laundering allegations in Victoria and Western Australia. These were launched after the gaming authority in New South Wales found a casino in Sydney was not suited to retain its gaming license.
Crown has three casino-hotels in Sydney, Melbourne, and Perth, as well as a casino in London’s West End. It also holds a 50% interest in UK-based casino operator Aspers Group and a 20% interest in US restaurant and hotel chain Nobu and several digital assets targeting a younger audience. A fourth Australian casino is under development in Melbourne.
Revenue declined 24% in 2020 to about $2.2 billion, while net profit fell 80% to $81.9 million. This was attributed largely to government-mandated closures of gaming and non-essential services in response to the COVID-19 pandemic.
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