Blackstone’s third bid for Crown is rejected

By William Brown Updated
Crown CEO Steve McCann exits the business

A third takeover offer from private equity group Blackstone has been rejected by Crown Resorts.

The Sydney Morning Herald reports that the $12.50 per share bid received a fortnight ago “does not represent compelling value for Crown shareholders.”

The casino giant will however open its books to the company in the hope it will increase its $8.46 billion bid.

“However, the Crown Board has offered Blackstone the opportunity to access non-public information to allow Blackstone to undertake initial due diligence inquiries on a non-exclusive basis so that it can formulate a revised proposal that adequately reflects the value of Crown,” the company said in an ASX statement.

Crown has also denied Blackstone an exclusive look at its books, leaving the door open for other suitors, such as Sydney casino outfit The Star Entertainment Group, to lob rival bids.

The New York-headquartered Blackstone already owns 10 per cent of Crown and has been courting the scandal-plagued casino operator for months.

It lobbed its first takeover bid at $11.85 per share in March and increased that to $12.35 in May, but Crown said both were too low.

Crown shares were trading just below $10 before Blackstone’s latest offer was revealed in November.

Crown under new management

While previous offers were rebuffed, Blackstone is now dealing with a different leadership team at Crown following former executive chairman Helen Coonan’s departure amid damning revelations in Victoria’s royal commission into Crown.

Former Telstra and Optus boss Ziggy Switkowski officially took over as chairman last Wednesday after receiving clearance from state gambling regulators, joining former Lendlease boss Steve McCann who joined the company in June.

The Star Entertainment Group, which owns casinos in Sydney, Brisbane and the Gold Coast, is also interested in taking control of Crown and lobbed a merger proposal in May.

It withdrew the offer, however, when it appeared there was a real chance that Victoria’s royal commission into Crown would recommend that it lose the licence for its flagship Melbourne casino.

The royal commission found Crown was unfit to run a casino in light of a string of “disgraceful” legal and ethical breaches, but recommended it keep its licence because cancelling it would be too harmful to Victoria’s economy and Crown Melbourne’s 11,500 employees.

New South Wales suspended Crown’s gaming licence for its new Barangaroo resort in January after an independent inquiry found it was unfit to run a casino.

Crown is working to satisfy the NSW gambling regulator it has reformed itself enough to have the licence reinstated.

Crown rejected two previous offers from Blackstone

Blackstone made offers of $11.85 in March and $12.35 in May, which were both rejected by the Crown board.

The New York-based Blackstone’s third offer landed three weeks after Victoria’s royal commission.

The potential of Crown to lose its Melbourne licence was a significant stock market issue.

It’s main rival, The Star Entertainment Group, lobbed a $12 billion merger proposal in May, but withdrew the offer, citing the uncertain outcome of ongoing royal commissions in Victoria and Western Australia.

A spokesman for The Star, which faces its own public inquiry over criminal infiltration in early 2022, said that it “remains open to exploring potential value-enhancing opportunities with Crown.”

Billionaire media heir James Packer, who owns 37 per cent of Crown, will be a decisive figure in any takeover deal.

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