Blackstone Completes $8.9 Billion Crown Takeover

Done Deal. Blackstone Group finally completes its $8.9 billion takeover of Crown Resorts, ending months of uncertaintly for the casino giant.

Crown Resorts is under new ownership after Blackstone Group completed its $8.9 billion takeover. The American investment giant took over the reins on June 24; this is the company’s largest investment in Asia to date.

Rumours of a Blackstone takeover circulated from early 2021 but they were only rumours. That changed when the private equity giant officially threw its hat into the ring in late March 2021. Blackstone tested Crown’s resolve with an $8.02 billion takeover offer. Crown rejected the bid, citing it undervalued the company. However, it seemed fair with all the legal wranglings Crown found itself entangled in.

Blackstone came back with an improved offer in May, which Crown rejected. The Americans did not abandon their quest to take over Crown, and tested the waters with an $8.5 billion offer. Again, Crown rejected the takeover bid but handed over insider information for Blackstone’s consideration. Whatever that information detailed worked because Blackstone returned with a revised $8.9 billion offer, which Crown’s board accepted.

Takeover Takes Four Months From Bid Acceptance

Crown Resorts accepted the $8.9 billion takeover bid in mid-February 2022; it valued Crown’s shares at $13.10 each. Blackstone jumped through many hoops as regulators scrutinised the company, and rightly so with Crown’s shady past dealings.

The Foreign Investment Review Board (FIRB) gave Blackstone’s takeover its blessing in late April. Shareholders voted almost unanimously in favour of having new owners, leaving the ball in the court of the New South Wales Independent Liquor and Gaming Authority (ILGA) and the Victorian Gambling and Casino Control Commission (VGCCC). Both approved the takeover on June 8, after some 15 months of due diligence.

An ILGA spokesperson revealed four key areas Blackstone agreed to follow.

  • Not engaging with junket operators
  • Appointment of an independent monitor
  • The requirement to undertake rigorous customer due diligence for both members and guests and monitor patron accounts for criminal activity
  • Due diligence on cash transactions over a certain threshold, including identifying the source of player funds.

Alan Miyasaki, a Blackstone executive, is looking forward to the company’s newest venture.

“We look forward to working with the teams at Crown and applying our experience in owning and operating marquee hospitality brands around the globe with the highest levels of ethics and integrity to create something unique for employees, local communities, and visitors.”

All Three Crown Casinos Are Up and Running

Blackstone’s takeover gives it three Crown-branded casinos in Melbourne, Perth, and Sydney. Regulators gave the latter its blessing to open the casino of the $2.2 billion complex earlier this week.

Industry experts predict Crown Sydney will contribute $100 million in tax revenues to the government. This figure is far less than the high-roller attraction promised when then-premier Barry O’Farrell sanctioned the new casino resort in 2013.

There are several reasons for this. First, COVID-19 has all but wiped-out international travel, especially from China where Crown traditionally sees super-wealthy patrons travel from. China continues to enforce strict travel restrictions, with residents not permitted to travel to Australia unless absolutely necessary.

In addition, Crown promised to not use junket operators, meaning even if well-heeled Chinese gamblers could head to the casino, they would have to do so under their own steam.

Furthermore, pokies are not permitted at Crown Sydney under the terms of its licence. This last part is a major blow when one considers the huge profit these machines make the casino; Crown Perth’s pokies generated $306 million last year alone.

Ben Lee, a Macau-based casino analyst, expects Blackstone to lobby for pokies now the takeover is complete.

“Crown is not going to poach their people from Melbourne and send them to Sydney. They’re going to go after Star’s local Sydney market as well as Queensland’s market. Right now, pokies are not allowed but I would bet any money they will be lobbying the government very hard to be allowed to have slot machines in Barangaroo.”