The board of casinos operator Crown Resorts (ASX: CWN) has conditionally recommended acceptance of an $8.9 billion take-private offer from Blackstone Group.
The company announced on 14 February that its board had decided to recommend acceptance of Blackstone’s $13.10-a-share offer received in January. This was the fourth offer since Blackstone made an initial bid in March and represented an 11% increase on the initial bid.
Crown has entered into a scheme implementation deed with a Blackstone acquisition vehicle under which Blackstone will acquire all the shares in Crown by way of a scheme of arrangement.
In the announcement, Crown chairman Ziggy Switkowski said: “The board has fully considered the Blackstone transaction and unanimously recommends the proposal, subject to customary conditions such as an independent expert concluding the transaction is in the best interests of Crown shareholders and there being no superior proposal.”
The transaction is to be submitted to a shareholder vote in the second quarter of 2022.
Crown’s largest shareholder, James Packer-controlled Consolidated Press Holdings (CPH), which holds more than a third of the company, has also backed acceptance of the Blackstone offer.
Blackstone has a 9.99% stake in Crown which it acquired from Melco Resorts & Entertainment for $8.15 a share in April 2020.
Blackstone made its first offer after Crown became the focus of multi-state enquiries into criminal activities such as money laundering in its casinos. The enquiries cast doubt on whether the company would be allowed to introduce gaming operations at its new Barangaroo, Sydney, hotel and casino.
In addition to Blackstone’s offers, Crown received a merger proposal from rival casino operator Star Entertainment (ASX: SGR) but Star withdrew that offer in July after Star became the subject of investigations into allegations of tax evasion and failure to adequately guard against money laundering in its casinos.
Separately, debt-focused global investment firm Oaktree Capital Management offered to finance Crown buying back all, or some, of the CPH stake. This was posed as a solution to James Packer’s involvement in the company being an impediment to a gaming licence being granted for Barangaroo.
In the 14 February announcement, Switkowski went on to say: “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. 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. The all-cash offer provides shareholders with certainty of value.”
Crown chief executive Steve McCann said the offer appropriately reflected the value of Crown’s world-class assets and reputation for premium service and experiences. The agreement also highlighted the strength of the Crown brand and confidence in the future of the business as it emerged from challenging times.
Crown’s shares closed at $12.31 on 18 February.
Image: Crown’s Barangaroo, Sydney, hotel and casino.