Embattled casino group Crown says it has received a non-binding takeover offer from US private equity giant Blackstone worth $8 billion.
The offer is at a price of $11.85 a share, a big premium to Friday’s close at $9.86.
Crown shares will jump sharply to the Blackstone price when trading opens on Monday.
Blackstone though referenced the period before Crown’s half year results in late February and said the $11.85 offer price was a 19% premium to the five-day weighted average in that period.
Crown directors have told shareholders to sit and wait.
“The Crown Board has not yet formed a view on the merits of the proposal,” the company said in an ASX statement before trading opened.
“It will now commence a process to assess the proposal, having regard to the value and terms of the Proposal and other considerations,” the board said in its statement on Monday morning.
Blackstone said its offer was conditional on due diligence; arranging debt finance; a unanimous Crown Board recommendation and a commitment from all Crown Directors to vote in favour of the Proposal (in the absence of a superior proposal and subject to an Independent Expert concluding that the proposed transaction is in the best interest of Crown shareholders); execution of a binding Implementation Agreement incorporating various terms and conditions including a condition that Blackstone receive regulatory confirmation that a Blackstone-owned Crown is considered a suitable person to continue to own and operate the Sydney, Melbourne & Perth licences and other gaming-related approvals as required; and approval from Blackstone investment committees.
That’s a highly conditional offer with the most important being the regulatory approval.. It is unclear whether Blackstone will submit itself for scrutiny by regulators. There are currently royal commissions into crown’s activities in Victoria and Perth.
A commission on inquiry in NSW last year uncovered and confirmed media reports of widespread money laundering, association with overseas criminals, dud deals, weak management and board oversight and the dominance of the company’s affairs by James Packer to the detriment of the rest of the shareholding base.
Mr Packer isn’t a director Crown but maintains a 36.8% shareholding. The shares Blackstone bought from Melco were sold to Melco by Mr Packer’s private company in a deal in 2019 that saw the Macau based company end the transaction in early 2020.
Melco agreed in May 2019 to pay Mr Packer $1.76 billion for a 19.9% stake in Crown, to be sold in two tranches of 9.99%. At the time Melco boss Lawrence Ho said he was interested in taking a controlling stake in the group.
The second tranche was put on hold after the NSW gambling regulator launched an unprecedented public inquiry into probity issues around Crown and Melco, including whether the share sale breached the terms of Crown’s Sydney casino licence. COVID also helped end the deal.
In late April 2020, Melco sold its stake to American private equity firm Blackstone at a loss of $328 million. Melco paid nearly $13 a share for the first Packer stake.
