(Bloomberg) — Blackstone Group Inc. offered to buy Crown Resorts Ltd. in a cash bid valuing the troubled Australian casino operator at A$8.02 billion ($6.2 billion).
The New York-based private equity firm, which owns 10% of Crown, offered to buy the rest for A$11.85 a share, Crown said Monday. That’s 20% higher than Friday’s close. Crown stock soared to A$11.71 at the open in Sydney.
Crown, whose biggest shareholder is billionaire James Packer, “will now commence a process to assess the proposal,” it said in a statement. There’s no certainty an agreement can be reached, Crown said.
Read more: Blackstone Seeks to Buy Crown Resorts at 20% Premium
Blackstone is pouncing as Crown tries to navigate a crisis threatening its entire Australian gaming business. The company was last month found unfit to operate its new Sydney casino after years of money laundering at its other properties, and faces inquiries into its suitability to run its casinos in Melbourne and Perth.
Crown shares have almost halved from a high of A$18 in early 2014. Since then, they’ve been pummeled by a series of dramas, including a 2016 legal crackdown in mainland China, an aborted takeover and the Covid-19 pandemic.
The risk for Blackstone is that it’s left owning a company hamstrung by fresh regulation. Last month’s New South Wales inquiry said Crown needed to overhaul its management, governance and culture before gaming operations could start in Sydney. Chief Executive Officer Ken Barton and five other directors have since quit.
A similar probe starts Wednesday into Crown’s suitability to run its Melbourne casino. A separate investigation into Crown Perth will also take place this year. That means Blackstone could be the new owner of a company that’s barred — temporarily, at least — from operating its three Australian casinos.
“That’s a material risk to consider,” said Xinning Xiao, a senior lecturer in accounting at Monash Business School in Melbourne who specializes in corporate governance. “The restructuring may take years.”
But for Packer, Blackstone’s approach is a chance to exit Crown after at least two failed attempts to find a suitor in recent years.
Wynn Resorts Ltd. in early 2019 abruptly ended talks to buy Crown for about A$10 billion, just a few hours after the discussions leaked to the media. Last year, Melco Resorts & Entertainment Ltd. scrapped a deal to buy 20% of Crown from Packer.
A representative for Packer’s private investment company didn’t immediately reply to an email seeking comment on Blackstone’s approach.
Read more: Packer’s Casino Dream Dashed as Crown Seen Unfit for License
Blackstone wants unanimous approval from Crown’s board before the deal can go ahead, as well as permission from regulators to own and operate Crown’s casinos, according to the statement.
Blackstone bought its current stake in Crown from Melco last year for A$8.15 a share.
(Updates throughout with Crown’s troubles.)
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
