Blackstone Group Modifies Offer for Crown Resorts
You may remember the recent bombshell announcement that Blackstone Group Inc is trying to buy Crown Resorts Ltd for A$8 billion. When the deal was initially made, it was loosely stated that the sale is contingent on the company being able to run casinos in Australia.
Per a recent report from Reuters, it appears that the company has added additional stipulations requiring that the company not lose additional licenses before the sale closes. Crown’s board is currently considering the proposition from Blackstone.
Blackstone Group Modifies Offers for Crown
On Monday, Reuters reported that Blackstone Group Inc has modified its offer to Crown Resorts Ltd to try and safeguard itself from potential legal pitfalls. According to the report, Blackstone’s offer is now contingent on Crown not losing additional casino licenses.
You may remember that Crown has already been found unfit to hold a license in Sydney due to its links to criminal organizations. Furthermore, the company is facing inquiries in Western Australia and Victoria. In order for the sale to Blackstone to go through, Crown must not lose any additional licenses.
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Blackstone currently expects to complete the purchase of the company during Q3 2021. This places the purchase somewhere between July and September. This is contingent on Blackstone receiving regulatory approval to buy the casino.
According to a statement from Crown Resorts, the conditions are safeguards to protect the casino from receiving adverse recommendations regarding its WA or Victoria license before the sale finalizes in the courts. Victoria will deliver its decision regarding Crown by August and WA by November.
Blackstone is presently offering A$11.85 for each share of Crown stock it does not own. The US-based buyout company already has 10% of Crown shares. The big question now is whether Crown and its board will accept the terms.
Crown Board Still Evaluating Offer
According to the Reuters report, Crown’s board is still evaluating the proposal. The report did not give an indication of whether the board plans to accept the buyout or take its chances with regulators. However, considering that Blackstone is hedging its bets with the agreement modification, it seems likely that the deal will proceed.
One person that will benefit greatly from this deal is Crown’s founder James Packer. Packer presently owns almost a 37% stake in the company. The deal will net him around A$2.9 billion. Packer is a major point of contention in the whole saga surrounding the Crown.
Despite not being on the board anymore, he has still received updates about the company’s financials. He still has a major presence on the board. Regulators have also stated that they want Packer completely removed from having anything to do with the company.
Some will not like that Packer would receive such a massive payout. He is considered to be the reason that the company is in its present state. However, the buyout would put an end to the Packer legacy and allow the company to move forward for the future.
Blocking Licenses Would Be Counterproductive
Blackstone made a smart move by modifying its offer. There was no guarantee that Victoria or WA regulators were not going to make a quick decision regarding licensing. A negative outcome would effectively sink any potential takeover deal. What Blackstone has done is give itself time to finalize a deal and put itself in a position to save Crown’s remaining licenses.
If Blackstone is able to complete its purchase, it is likely that they will try and apply for a Sydney license. Packer will be out of the picture, plus anyone that the regulators would deem unsuitable for licensing. For now, the best thing for regulators to do is to give the process time to play out. If the deal falls through, then it can take action against Crown.
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