Private Equity firm Blackstone Inc. after a yearlong pursuit of acquiring Crown Resorts Ltd now looks triumphant. The U.S. P.E. giant sweetened its bid for the third time for the ailing Australian Casino operator to $6.5 billion (A$ 8.9 billion).
Blackstone Inc., which owns 10% in Crown, lifted its bid to A$13.10 per share, higher than the November offer of A$12.50 per share as per the statement by the Melbourne-based company on Thursday.
According to Bloomberg News, Crown shares rose to A$ 12.64 in afternoon trading, up by 8.7%. It closed at A$11.63 in Sydney Wednesday.
Crown is ready to engage with Blackstone and will recommend its shareholder to accept the bid at A$13.10 per share if a binding offer is made at that price. If it goes through, the deal will end a sorry chapter in the history of Crown Resorts. The company was found unsuitable for running its Casino in Sydney. It was given two years to correct the numerous litanies at its flagship casino in Melbourne, which included underpaying taxes and facilitating money laundering.
If Blackstone can appease regulators and reform the Casino, a clear prize includes a monopoly in casinos in the two Australian cities along with a gleaming A$2.2 billion Sydney waterfront resort.
Steve Johnson, the Chief Investment Officer of Sydney-based Forager Funds Management, which has Crown shares in its portfolio, said that Crown continues to remain high quality and valuable asset. Crown is worth more with Private equity than being listed. Johnson welcomed the increase in the bid price and supported the board of Crown to push for a reasonable offer.
Crown agrees to sell to the U.S. Private Equity giant will enable the largest shareholder James Packer to make a clean exit. Crown, in which Parker held 36% shares, was synonymous with the Packer name.
A crackdown in Mainland China by the authorities in 2016 unraveled the gambling operations of Crown, with more than a dozen employees getting arrested. Crown spun off its international assets, including a stake in Melco Resorts, a Macau-based casino operator, and retreated to Australia.
Blackstone’s first offer to Crown was in March 2021 of A$11.85 per share. This offer, along with another offer in May 2021, was declined as too low. In July, Star Entertainment Group Ltd, a rival casino operator in Australia, discarded a Crowns merger Proposal. A proposal to buy out Packer’s stake by Oaktree Capital Management L.P. also did not materialize.
