Crown Resorts board of directors closer to accepting Blackstone acquisition offer

Crown Resorts, Australia's largest casino operator, has announced that its board will likely back a revised AU$8.87-billion ($6.66 billion) buyout offer from Blackstone, a US equity firm. A decision could be made in the coming weeks, unless a counter-proposal emerges.

Crown was offered a fourth, non-binding offer for AU$13.10 per share. This follows the rejection of Blackstone's previous bid of A$12.50.

The revised offer puts Blackstone in the box seat to win control of Crown, which has faced devastating misconduct inquiries in every state it operates in. At the same time, protracted COVID-19 lockdown measures have caused a drop in visitors.

According to Reuters, a person who was directly familiar with the matter said that the close to 5% price increase, subject to initial due diligence, was supported by major investors, including Crown founder and former CEO James Packer, who owns about 60% of Crown stock.

According to the person, who wasn't authorized to speak publicly about the matter, there are still hopes for a deal to be signed by the end of January.

Consolidated Press Holdings, a vehicle owned and controlled by Packer that holds a 37% share in Crown, stated it was encouraged by the announcement and is awaiting further developments.

It stated that Crown Resorts had released documents to the market relating to a binding transaction. "CPH will review these documents before making a decision about its shareholding," it asserted

Perpetual Investment Manager, Crown's third-largest shareholder, holds a 9.2% share. Perpetual said that it supported the revised proposal, in the absence of a better one.

Blackstone, which holds 9.9% of the stock, declined to comment.

According to a second source, the deal is possible by this month, if it has been approved by three Australian casino regulators and a shareholder vote.

Crown shares rose as high as 9% to AU$12.68 Thursday morning. This was their highest price since June 4. However, it is still below Blackstone's offer, which indicates market doubt about a competitor's bid.

The casino operator announced that it would engage with Blackstone on an informal basis and allow the investment manager to complete due diligence.

Crown stated that if Blackstone offers a binding offer of at least AU$13.10 per share and if no other offers are made, its board will recommend to shareholders that they vote in favor of the proposal.

Steve Johnson, chief investment officer of Forager Funds Management and owner of Crown shares, stated that it is likely that a deal would get done.

He asserts, "The increase in offer price is a welcome step in the right direction and we are supportive of the board continuing a push for an appropriate firm offer for shareholders."

After an inquiry in July last year urged Crown be stripped of its gambling license for its main Melbourne resort, Australia's second-biggest casino operator, Star Entertainment Group, withdrew an AU$9 billion mostly stock buyout proposal. However, it told Reuters that it is still willing to consider trying to make a deal.

Star is currently subject to a separate and independent regulatory inquiry regarding its anti-money laundering actions.

Crown is open to discussions with Star, and expects its peer will have more freedom to maneuver after the regulatory inquiry closes, according to a third person who was familiar with the matter.

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