Crown to engage Blackstone after receiving revised takeover proposal

Blackstone’s recent offer for Crown Resorts has been rejected by the company’s board, citing it “does not represent compelling value”.

Crown Resorts has confirmed the receipt of a fresh takeover offer from a company on behalf of funds managed and advised by Blackstone and its affiliates.

The revised proposal, which has been made after considering non-public information provided by Crown during initial due diligence, represents a price of A$13.10 cash per share.

This comes in at an increase of $0.60 cash per share compared to the previous offer of $12.50, which was announced to the Australian Stock Exchange on November 19, 2021. 

Blackstone had made a number of acquisitive overtures to the embattled casino operator, with its latest proposal subject to the same conditions as its prior motion.

This includes, but is not limited to, completing further due diligence; unanimous support and recommendation by the Crown board; execution of a binding implementation agreement; and Blackstone receiving final approval from the casino regulators in each of Victoria, New South Wales and Western Australia. 

The Crown board says that, following consideration, it considers that “it is in the interests” of the group to engage further with Blackstone on a non-exclusive basis.

Furthermore, it has also decided to provide Blackstone with the opportunity to finalise its due diligence inquiries and negotiate the terms of an implementation agreement, so that the group can put forward a binding offer. 

Should Blackstone make a binding offer at a price of no less than $13.10 cash per share then, subject to the parties entering into a binding implementation agreement on terms and conditions acceptable to Crown, it is the board’s current unanimous intention to recommend that shareholders vote its favour in the absence of a superior proposal, and subject to an independent expert concluding that the transaction is in its best interests.

Crown adds that it will now engage with relevant stakeholders, including regulatory authorities and shareholders, prior to the execution of any binding agreement. 

“The Crown board notes that there is no certainty that the discussions between Crown and Blackstone will result in a change of control transaction or an offer capable of acceptance by Crown shareholders,” an update offered by the company added. 

“The Crown board is focussed on maximising value for Crown shareholders and will carefully consider any proposal that is consistent with this objective.”

October 2021 saw Crown retain its Melbourne casino licence, despite a royal commission deeming the group to be “unsuitable” on the basis that it engaged in “illegal, dishonest, unethical and exploitative” conduct.

The launch of a royal commission came after a scathing report in New South Wales, commissioned by the ILGA and led by former supreme Court judge Patricia Bergin, found that the company isn’t fit to operate the $2.2bn Crown Sydney Hotel Resort.

The almost 800-page critique of Crown’s suitability, which itself followed allegations raised by Australia’s Nine Network, the Sydney Morning Herald, The Age and other media outlets, alleged that Crown, or its agents, affiliates or subsidiaries, engaged in money-laundering; breached gambling laws; and partnered with junket operators with links to drug traffickers, money launderers, human traffickers, and organised crime groups. 

A short time after Victoria initiated its investigation, Western Australia upgraded its own inquiry to a royal commission, which it said will also look at the state’s regulatory framework, including any actual or perceived conflicts of interest by officers involved in casino regulation, and any matters that might enhance the Gaming and Wagering Commission’s future capability and effectiveness.