Crown recommends shareholders vote in favour of Blackstone takeover

By Noah Taylor Updated
Crown Resorts off the ASX as Blackstone takeover confirmed

Crown Resorts has revealed that it will recommend shareholders accept a takeover offer by private equity firm Blackstone.

The Sydney Morning Herald reports that Blackstone’s offer is worth at least $8.87 billion, unless a rival suitor makes a higher bid.

The James Packer-backed outfit said that Blackstone had increased its previous $12.50 per share offer for the group to $13.10 after it granted it due diligence to inspect Crown’s books in early December.

Crown’s shares jumped 8.17 per cent in the first 30 minutes of trading and at 10.30am were trading at $12.58.

Crown, which owns properties in Melbourne, Perth and Sydney’s Barangaroo, said that following the higher bid, it will start negotiating the terms of a sale so that Blackstone can put forward a binding offer.

Blackstone increases offer to $13.10

If Blackstone makes a binding offer at $13.10 or more, then “it is the Crown Board’s current unanimous intention to recommend that shareholders vote in favour of the proposal in the absence of a superior proposal”, the company said.

The fate of any takeover deal sits with billionaire James Packer, who owns 37 per cent of Crown and has been looking to exit his stake for a number of years.

A sale to Blackstone through a scheme of arrangement would require a shareholder vote with 75 per cent support.

Blackstone’s offer of $13.10 per share is above the $13 which in 2019 Mr Packer agreed to sell a 19.9 per cent stake in Crown to Hong Kong’s Melco Resorts.

Mr Packer may also be ordered to sell down his stake to below five per cent, as recommended by Victoria’s royal commission into Crown last year.

Star lobbed Crown bid in May at $12

This latest development throws down the gauntlet to Crown’s Sydney-based rival The Star Entertainment Group, which in May last year proposed a $12 billion merger between the two ASX-listed groups.

The Star withdrew its merger offer as Crown’s licences for its Melbourne and Perth casinos came under threat from royal commissions that examined criminal activity by its customers and other malpractice, but its said it is still interested in combining the two casino outfits.

Star is now the subject of an inquiry by the NSW gaming regulator following allegations of similar governance breaches, with the NSW Independent Liquor and Gaming Authority examining its relationship with controversial junket operators, with public hearings as part of this review set to start this year.

NSW suspended Crown’s casino licence for its new tower at Sydney’s Barangaroo in late 2020 after a public inquiry found evidence of money laundering, criminal infiltration and governance dysfunction at the company.

Crown said in December that it hoped to finally open the casino in 2022.

A Victorian royal commission found Crown’s Melbourne casino unfit to run its flagship property after examining a “disgraceful” litany of legal and ethical breaches, but decided not to recommend cancelling its licence, and instead gave it two years to reform itself.

Western Australia’s royal commission is set to report its findings in March.

More than two years of rolling scandals and regulatory scrutiny has triggered an almost complete clean out of senior management and directors at Crown.

Former Lendlease boss Steve McCann was appointed chief executive officer last May and former Telstra boss Ziggy Switkowski joined as chairman in December.

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