US private equity firm Blackstone Group has launched an A $ 8 billion (US $ 6.2 billion) bid to buy Crown Resorts, the under-pressure gaming company backed by Australian billionaire James Packer.
Blackstone’s unsolicited offer followed a decision by Australian regulators last month that Crown was not fit to operate a new A $ 2.2 billion casino complex in Sydney over concerns about money laundering and poor corporate governance.
Crown said on Monday the takeover offer was A $ 11.85 per share, a premium of around 19% to the average share price of the games group since the release of its first half financial results. over a month ago.
Crown added that the offer was subject to due diligence, approval by Blackstone’s investment committees and a decision by Australian regulators that the US private equity group was a appropriate entity to operate its portfolio of casinos in Sydney, Melbourne and Perth.
“Crown counsel has yet to form an opinion on the merits of the proposal. He will now begin a process of evaluating the proposal, taking into account the value and terms of the proposal and other considerations. He will also engage with relevant stakeholders, including regulatory authorities, ”Crown said in a statement to the Australian Stock Exchange.
Crown shares jumped 18% to A $ 11.61 on Monday after the news broke.
If a deal can be made, it would mark another push for Blackstone into the casino business after its Offer of $ 4.25 billion to acquire the Bellagio complex in Las Vegas from MGM Resorts International in October 2019.
Blackstone already owns 9.9% of Crown and has been appointed as a potential acquirer of the company.
Packer, who owns 37% of Crown and has made the company Australia’s largest games group, will be at the heart of any deal with Blackstone. However, analysts believed there were signs that he would be a willing seller due to regulatory hurdles facing the Crown and its his own personal situation.
The billionaire resigned of Crown’s board of directors in 2018, citing mental health issues – a decision that followed the arrest and conviction of 19 of the group’s employees in China. A recent report of a government-commissioned investigation criticized Packer, saying his ability to “remotely maneuver” operations must cease for the health of the company.
The report concluded that Crown was not fit to operate its A $ 2.2 billion flagship casino in Sydney and that the company had unwittingly facilitated money laundering.
“The very serious problems of infiltration of the accounts of Crown subsidiaries by organized criminals should thrill not only any casino regulator but the community at large,” said the report by Patricia Bergin, a former judge.
Crown accepted the resignation of five of its directors following the report. The company still faces two state government-commissioned investigations in Victoria and Western Australia in the coming months.
Kelly Amato, analyst at Fitch Ratings, said a deal with Blackstone could help Crown resolve some of the issues highlighted by the report regarding Crown’s relationship with CPH, Packer’s private investment vehicle.
“Even though Crown has already terminated the agreements with CPH and its representatives on Crown’s board of directors have already resigned, we believe that the removal of CPH as a shareholder will be viewed favorably by regulators as it will bring a disruption permanent in the relationship, ”she said.