Blackstone Takeover Of Crown Resorts Moves Into High Gear

February 14, 2022
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A Blackstone Group takeover of Australian casino operator Crown Resorts has become much more likely after the companies entered into a scheme implementation deed, with each committing to a break fee of A$89m ($63m).

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A Blackstone Group takeover of Australian casino operator Crown Resorts has become much more likely after the companies entered into a scheme implementation deed, with each committing to a break fee of A$89m ($63m).

Agreement to the deed follows the Crown Resorts board’s unanimous backing in January for a fourth buyout offer by the New York-based financial services giant.

The terms in the deed announced on Monday (February 14) are expanded, but apparently structurally unchanged, from that offer, with Blackstone offering shareholders A$13.10 in cash per share, according to a Crown filing to the Australian Securities Exchange.

The offer prices Crown equity at A$8.9bn ($6.3bn), committing Blackstone to an A$8bn payout for the just over 90 percent of Crown stock that it does not own.

Also unchanged is the possibility of Crown accepting a superior offer, but the deed binds Crown to not seek new suitors and allow Blackstone to match any rival offer.

Should either party withdraw from the deal, an A$89m break fee will apply.

“The Crown Board and management have made good progress in addressing a number of significant challenges and issues emerging from the COVID-19 pandemic and various regulatory processes,” Crown chairman Ziggy Switkowski said in the filing.

“Nevertheless, uncertainty remains and having regard to those circumstances and the underlying value of Crown we believe the Blackstone Transaction represents an attractive outcome for shareholders,” he said, noting an 11 percent increase from Blackstone’s initial offer of A$11.85.

However, the deal must also receive approval from Australia’s Foreign Investment Review Board, an independent expert representing shareholders and three state gambling regulators, two of which — New South Wales state and Victoria state — have severely punished Crown after major probes into a litany of compliance failures.

Western Australia state is also set to act against the company after its Royal Commission into Crown’s Perth casino delivers its report to the government in early March.

Leading shareholder James Packer, a recluse who still controls some 37 percent of the company after being legally stripped of board influence, stands to reap A$3.2bn if he relinquishes his stake in the company he once dominated.

The filing said a scheme meeting will be held in the second quarter of 2022 for approval of the deal, pending regulatory and other clearances.

Shareholders were modestly pleased about the deed, lifting Crown shares 2 percent to A$12.64 at the close of trading on Monday, although most enthusiasm for the takeover was apparently spent on a nearly 9 percent rise when the deal was announced last month.

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