The US private equity firm Blackstone Group has made a bid of A $ 8 billion (US $ 6.2 billion) to buy Crown Resorts, the gambling industry backed by Australian billionaire James Packer.
Blackstone’s unsolicited offer follows a ruling by Australian regulators last month that Crown was unsuitable to operate a new $ 2.2 billion casino resort in Sydney due to concerns about money laundering and poor corporate governance.
Crown said on Monday that the buyout offer represents A $ 11.85 per share, or about a 19 percent premium to the gaming group’s average share price since it published its financial results more than a month ago.
Crown added that the bid was subject to the necessary prudence, approval by Blackstone’s investment committees and a decision by Australian regulators that the US private equity group was a suitable company to operate its portfolio of casinos in Sydney, Melbourne and Perth.
‘The Crown Council has not yet formed an opinion on the merits of the proposal. It will now begin a process of evaluating the proposal, taking into account the value and terms of the proposal and other considerations. It will also enter into discussions with relevant stakeholders, including regulatory authorities, ”Crown said in a statement to the Australian Stock Exchange.
Shares in Crown rose 18 percent to $ 11.61 on Monday after the news.
If an agreement can be reached, it will be a further push from Blackstone in the casino sector following the $ 4.25 billion deal to acquire the Bellagio resort in Las Vegas in October 2019 from MGM Resorts International.
Blackstone already owns 9.9 percent of Crown and is named a potential acquirer of the company.
Packer, which owns 37 per cent of Crown and has built the company into Australia’s largest gaming group, will be the key to any deal with Blackstone. However, analysts believed there were signs that he would be a willing seller due to the regulatory hurdles facing Crown and his own personal circumstances.
The billionaire resigned from Crown’s board in 2018, citing mental health issues – a move that followed the arrest and conviction of 19 employees of the group in China. In a recent report of an investigation commissioned by the government, Packer is criticized for saying that its ability to manage remote operations for the health of the company should cease.
The report concluded that Crown was not fit to operate its flagship A $ 2.2 billion in Sydney and that the company had unknowingly facilitated money laundering.
“The very serious problems with the infiltration of the branches of Crown branches by organized criminals must send a shiver down the spine, not only by any casino regulator, but also by the community in general,” said Patricia Bergin, a former judge, said.
After the report, Crown accepted the resignations of five of its directors. The company is still facing two government investigative institutions in Victoria and Western Australia in the coming months.
Kelly Amato, an analyst at Fitch Ratings, said a deal with Blackstone could help Crown address some of the issues highlighted in the report on the relationship between Crown and CPH, Packer’s private investment instrument.
“Although Crown has already terminated agreements with CPH and has already resigned its representatives on Crown’s board, we believe the removal of CPH as a shareholder will be considered favorable by the regulators as it will provide a permanent break in the relationship, she said. .