© Reuters. FILE PHOTO: Logo of giant Australian casino company Crown Resorts Ltd adorns a hotel and casino complex in Melbourne, Australia
By Byron Kaye and Rashmi Ashok
SYDNEY (Reuters) – Blackstone Group (NYSE 🙂 Inc proposed to acquire Australian Crown Resorts Ltd in an agreement to value the casino operator at $ 6.2 billion, down from the value of the public. The company struggled a year ago, but it could be due to legal pressure.
Crown shares jumped more than 20% after the company disclosed an unofficial offer on Monday, surpassing Blackstone’s designated price of AU $ 11.85 as investors wagered on a liquidity streak. The larger payout could be due to the world’s No. 1 private equity firm or another petitioner.
“It’s great to be offered, and now it’s about price discovery,” said John Ayoub, a portfolio manager at Wilson Asset Management, which owns Crown shares.
“These stocks are trading at a low income and I wouldn’t be surprised to see further activity in this area.”
If Blackstone’s takeover was successful, it would complete a gambling-related property portfolio from Las Vegas to Spain with resorts in three Australian cities.
But it will put a company in turmoil after Crown lost its license to operate a top new Sydney waterfront casino last month amid alleged money laundering and association with nest crime. function.
It also faces requirements in two other Australian states where the Crown is licensed to operate.
Meanwhile, Australia’s financial crime agency is investigating Crown for money laundering allegations, and the company faces two civil lawsuits alleging non-disclosure of risks leading to stock devaluations. .
Blackstone’s indicative offering is low compared to stock trading levels before concerns over coronavirus caused market volatility in early 2020.
Crown shares closed up 21% at A $ 11.97. Investors often trade below the specified asking price to allow for the possibility of a failed transaction.
“Blackstone cannot escape this price if the casinos are not affected by COVID and regulatory issues,” said Nathan Bell, portfolio manager at Intelligent Investor, which owns Crown shares. .
“It was just an open bid. It was a messy situation and proposing to buy back a casino was complicated at best due to all regulations.”
Crown said its board has yet to take a position on the proposal but will speak with “stakeholders including regulators”.
Company founder James Packer, a leading shareholder with a 36% stake, will receive about A $ 2.9 billion from the deal.
Packer declined to comment. Blackstone, Crown’s second largest shareholder with 9.99%, confirmed the approach but declined to comment further.
Packer sold out casinos in Macau and the United States and began a series of attempts to take over the private Crown after 18 employees were jailed in China in 2016 for violating anti-gambling laws.
Three years later, media reports accused Crown of intentionally doing business with junket – or gambling tour operators – in connection with organized crime, leading to the discovery at a regulatory investigation. The next plan is to manage “dysfunction” where Packer dominates the board remotely despite not holding any official role.
An investigation called by the games regulator in New South Wales said Packer’s “remote scams” would have to be resolved before Crown could hold a casino license in the state, prompting its founder The company’s billionaire is under great pressure to sell off his shares.
Crown’s new tourist-targeted Sydney casino opened in December with no tourists due to pandemic-related border closures and no gambling because of restrictions introduced during exploration .
It has lost about half of its board of directors including the CEO since the investigation declared Crown was unfit to be licensed in Sydney in February.
Among the conditions of the Blackstone proposal, the private equity firm itself would need to be deemed fit by Crown regulators to run a casino.
New South Wales Independent Games and Wine Administration said it was aware of the approach but declined to comment further.
($ 1 = AU $ 1.2953)