American private equity firm Blackstone Group has made an A $ 8 billion ($ 6.2 billion) offer to buy Crown Resorts, the gaming-under-pressure business supported by Australian billionaire James Packer.
The unsolicited offer by Blackstone came after a decision by Australian regulators last month that Crown was not prepared 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 takeover offer represented A $ 11.85 per share, or about a 19 percent premium over the gaming group’s average share price since it published its first half financial results, ago one month.
Crown added that the offer was subject to due diligence, approval by Blackstone’s investment committees and a decision by Australian regulators that the U.S. private equity group was an appropriate entity to operate its portfolio of casinos in Sydney, Melbourne and Perth.
“The Crown board has not yet formed an opinion on the merits of the proposal. You will now start a proposal evaluation process, 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 Securities Exchange.
Crown shares jumped 18 percent to A $ 11.61 on Monday after the news.
If a deal can be struck, it will mark Blackstone’s new momentum in the casino industry following its $ 4.25 billion deal to acquire MGM Resorts International’s Las Vegas Bellagio resort in October 2019.
Blackstone already owns 9.9 percent of Crown and has been identified as a potential acquirer of the company.
Packer, which owns 37 percent of Crown and has made the company the largest gaming group in Australia, will be instrumental in any deal with Blackstone. However, analysts believed there were signs that he would be a voluntary seller because of the regulatory obstacles that Crown faces and his own personal circumstances.
The billionaire resigned from Crown’s board of directors in 2018, citing mental health problems – a move that followed the arrest and conviction of 19 group employees in China. A recent report from a government-commissioned inquiry criticized Packer, saying his ability to “remotely maneuver” operations must cease for the company’s health.
The report concluded that Crown was not suitable for operating its main A $ 2.2 billion casino in Sydney and that the company had inadvertently facilitated money laundering.
“The very serious problems of the infiltration of Crown subsidiary accounts by organized criminals should send a shiver down the spine not only of any casino regulator, but also of the community at large,” said the report by Patricia Bergin, a former judge.
Crown accepted the resignation of five of its directors after the report. The company is still facing two inquiries commissioned by the state government in Victoria and Western Australia in the coming months.
Kelly Amato, an analyst at Fitch Ratings, said that an agreement with Blackstone could help Crown solve some of the problems highlighted by the report on Crown’s relationship with CPH, Packer’s private investment vehicle.
“Although Crown has already rescinded agreements with CPH and its representatives on the Crown board have already resigned, we believe that removing CPH as a shareholder will be welcomed by regulators as it will provide a permanent break in the relationship,” she said. .