Blackstone agrees $6.3b buyout of Australian casino operator

Crown’s board is recommending that shareholders sell via a scheme of arrangement at a price of AUD 13.10 per share, a 5.8% premium to the February 11 close. The stock opened at AUD 12.75 on February 14, an eight-month high.

Blackstone first expressed interest in the company in March 2021, making an offer of AUD 11.85 per share. This was revised upwards to AUD 12.35 in May, but Crown rejected the bid.

In the meantime, fellow Australia-listed gaming business Star Entertainment Group made a scrip offer of AUD 14 per share. This was subsequently withdrawn despite Crown’s willingness to engage. Oaktree Capital Management also came in with a AUD 3bn structured solution, later revised to AUD 3.1bn, comprising a AUD 2bn private term loan and a AUD 1.1bn convertible loan.

Blackstone returned to the fray in November 2021 with its latest offer, which represents an increase in equity value of AUD 845m on its first bid, according to a filing.

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.

In October 2020, 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. Victoria decided against cancelling Crown’s Melbourne license because of the damage it would do to the state’s economy.

Last October, Crown settled a class-action lawsuit filed in federal court, without admission of liability, by agreeing to pay AUD 125m.

Blackstone’s interest in the company underlines an enduring private equity appetite for gaming-related assets in Asia, despite the debilitating economic impact of COVID-19-related lockdowns. The prevailing view is that the opportunity boils down to regulation, enforcement, culture, and regime stability – and therefore geography.

Developed markets with predictable compliance and legal environments have naturally proven more attractive in terms of land-based models such as casinos. Developing markets, meanwhile, have seen greater relative traction with digital businesses.

Crown’s revenue for the 12 months ended June 2021 was AUD 1.54bn, down 31.3% year-on-year. EBTIDA was down 77.4% at AUD 114.1m, while a net profit of AUD 81.9m in 2020 became a net loss of AUD 261.6m in 2021.

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• Topics
• Australasia
• Buyouts
• Consumer
• Real estate
• Australia
• The Blackstone Group
• gaming
• Travel