Crown Resorts Accepts $8.9 Billion Blackstone Offer
James Packer’s reign at Crown Resorts is all but over after the Australian gambling giant accepted the $8.9 billion Blackstone offer. The $8.9 billion sum is for the 91.01% of Crown Resorts stock Blackstone does not already own. Blackstone purchased a 9.99% holding from Melco Resorts’ Lawrence Ho in April 2020.
The terms of the Blackstone offer values Crown’s shares at $13.10 each. This is a significant premium over the $12.38 closing price last week. In addition, the figure is much higher than the $11.85 per share from the original Blackstone offer from March 2021.
Ziggy Zwitkowski, Crown Resorts’ CEO, informed shareholders about the deal.
“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. When considering any proposal, the Crown Board has consistently stated it is committed to maximising value for Crown shareholders. 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 offer represents an attractive outcome for shareholders. The all-cash offer provides shareholders with certainty of value.”
Fourth Time is a Charm For Blackstone Offer
The American investment giant first approached Crown on March 22, 2021. It offered $11.85 per share but Crown’s board turned down the Blackstone offer because it undervalued the company.
A second Blackstone offer came in on May 10, 2021. It increased the price per share to $12.35 each. However, the board turned down the proposal.
When a company the size of Blackstone wants something it usually gets it. The third bid of $12.50 per share on November 19, 2021, fell on deaf ears. However, Crown handed over confidential information about the business, which suggested a slightly larger bid would get the job done.
Upping the offer to $13.10 is deemed suitable by both parties, as is evident by Crown accepting this Blackstone offer.
Indeed, there are several terms and conditions linked to the completion of the deal. Regulators have to approve the transaction, which they will because they want Packer out of the door. Any change in gaming regulation scuppers the deal, too.
Both Blackstone and Crown Resorts agree to a break fee of $89 million. This means Crown pays Blackstone $89 million if it pulls out of the deal, and vice versa.
Packer’s Time Nearing an End
Packer has made it no secret he wants out of Crown Resorts. The billionaire enjoyed plenty of success during the early years of his reign. However, his life in the media intensified during his relationship and engagement with American superstar Mariah Carey. The couple had a very public unceremonious split in 2016, which took its toll on Packer’s mental health.
He stepped down as Crown chairman in March 2018 but still pulled several strings due to his massive Crown stock holding.
Crown endured several scandals and controversies with Packer in the background. These include the arrest of several employees in China for promoting illegal gambling. More recently, Packer’s sale of shares to Lawrence Ho sparked a royal commission into Crown’s affairs.
Regulators recently forced Packer to relinquish any control over Crown’s affairs. Furthermore, the deal Packer struck prevents him from having one of his people on Crown’s board.
This monster-sized $8.9 billion Blackstone offer hinges on Packer’s vote. He holds 37% of Crown’s stock, and any deal requires 75% shareholder approval. Packer is unlikely to throw a spanner in the works. Why? Because the Blackstone offer pads his pockets with $3.29 billion.
