On Thursday the board of Crown Resorts Ltd (CWN.AX) said that it is “likely” to get behind a buyout offer by U.S. private equity firm Blackstone Inc (BX.N) for a takeover with the caveat that a higher offer could change that attitude.
The A$8.87 billion ($6.46 billion) proposal to buy out shareholders including James Packer is the fourth attempt. The board called Blackstone’s prior bid of A$12.50 per share, not “compelling” but eyes seem to have brightened and ears have perked up with the current A$13.10 per share price.
Crown shares on the Australian Stock Exchange surged about 9% to A$12.67 on the news today from a close of 11.63 AUD the night before and looked to be set to close above 12.65 – leaving plenty of margin for profit between the current market price and Blackstone’s offer.
Market Price Well Under Offer Value
The fact the price stayed nearly flat from the opening surge to a few minutes before the closing bell as of the time of this report, indicates that the market excitement telegraphed by the earliest flurry of buying has been tempered by an overall sense in the market that more confidence is needed to push the non-binding offer price into new territory.
Crown has been under a withering series of strains and challenges, the most recent being a massive turn down in revenues amid the ongoing world health emergency and unrelenting inquiries into potential misconduct in the past including alleged money laundering violations dating back several years.
Reuters reports that a person familiar with the offer through direct knowledge says that James Packer and other major investors representing about 60% of all stock have performed due diligence and support the offer which is about 5% more than the last proposal.
The person was not authorized to speak on the matter publicly so their identity is not revealed but the source added that the deal could be signed before the end of this month.
In addition to shareholder approval, casino regulators in all three Australian states that Crown operates in would need to give their blessings to the deal. Another unidentified source predicted regulatory requirements could be satisfied by the end of June.
Only Known Valid Offer
Among contenders for the behemoth Australian gambling concern, the offer puts Blackstone on third base and hoping the current ball in play goes over the bleachers and doesn’t bounce back onto the field putting the game into extra innings with another and better offer from a competitor.
“CPH [Consolidated Press Holdings] will review all documents released to the market by Crown Resorts relating to a binding control transaction prior to making a decision regarding its shareholding,” said it was waiting for further developments but was encouraged by the proposed offer. Pack owns CPH and the vehicle controls a 37% stake in Crown.
Blackstone already owns nearly 10% of shares and didn’t provide comment to Reuters. However, with a 9.2% stake, Investment manager Perpetual is the third-largest shareholder and unless a better offer comes along the firm is in favor of the offer.
Steve Johnson spoke for Crown shareholder Forager Funds Management as chief investment officer. Johnson said, “The increase in offer price is a welcome step in the right direction and we are supportive of the board continuing a push for an appropriate firm offer for shareholders.”
He also said, “It is likely that a deal will get done.”
Source: Crown says likely to back improved $6.5 bln Blackstone buyout offer, Reuters Business, January 13, 2022