Blackstone Considers Another Bid on Crown Resorts, Gets Research
Posted on: December 2, 2021, 07:50h.
Last updated on: December 2, 2021, 09:49h.
Embattled Australian casino operator Crown Resorts is handing over confidential information regarding its player databases and other non-public information to Blackstone Group. That will allow the private equity giant to consider yet another bid for the gaming and hospitality group.
Blackstone remains bullish on Crown. That’s despite the company’s numerous regulatory investigations regarding its suitability to operate casinos in the three Australian states where it has resorts.
A third suitability probe for Crown’s Perth casino is currently ongoing. That report is expected sometime before March 4.
Two previous probes found issues with Crown. The inquiry in New South Wales determined that Crown was unsuitable to hold gaming privileges for Crown Sydney, which the company opened a year ago this month. A similar probe in Victoria resulted in the state continuing to allow Crown to conduct gaming at its flagship Crown Melbourne property. But the company must undergo numerous corporate and operational changes over the next two years to satisfy many state concerns.
Blackstone Back to Drawing Board
The Blackstone Group is one of Crown Resorts’ largest shareholders. The company maintains a 9.99 percent ownership position in the casino organization. Blackstone has made several bids to acquire the entire company. But so far, Crown’s board has rejected the offers.
Blackstone’s latest bid valued Crown at A$8.5 billion, which is more than US$6 billion. The Crown board of directors said that after reviewing the proposal with its financial and legal advisors, the leadership concluded that the Blackstone submission did “not represent compelling value for Crown shareholders.”
However, the Crown board made Blackstone a concession by giving the firm the opportunity to access non-public information. Crown says that might allow Blackstone to better formulate a qualifying offer “that adequately reflects the value of Crown.”
Crown says it will turn over confidential information regarding its customers and how much they spend and where once Blackstone signs a confidentiality agreement regarding the materials. Crown concluded that it remains open to offers from any organization that is prepared to offer significant value for its shareholders.
Determining Value
Blackstone’s latest offer equated to offering Crown investors A$12.50 per share. At the time of the suggestion, Blackstone’s price represented a 26.5 percent premium on where the shares closed that day.
Not enough, said the Crown board.
Crown shares have gained value since Blackstone’s November proposal. Shares on the Australian Securities Exchange have climbed from A$9.88 to close at A$11.02 today — an 11.5 percent gain.
Long before regulators began probing Crown Resorts on allegations that the company failed to protect its casino floors from being used to launder money, Crown shares were trading around A$13. The company’s all-time high came back in March of 2014, when shares were trading at A$17.55.
Of course, that record share price came long before the money laundering allegations, as well as Crown founder James Packers’ public meltdown. 2014 was also a world that did not know of COVID-19, a pandemic that continues to unsettle financial markets around the world.
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