The Blackstone Group has proposed to purchase the remaining stock of Crown Resorts, an Australian integrated resort operator, for A$8.02 billion (approximately £4.47 billion/€5.21 billion/$6.19 billion).
Blackstone has submitted a bid of A$11.85 per share to acquire the 90.1% of shares it does not presently possess.
Crown has stated that it has not yet conducted a comprehensive review of the proposition and has commenced an evaluation of the offer. During this assessment, it will communicate with relevant parties, including regulatory bodies.
The operator added that its investors do not need to take any action at this time and indicated that the offer might not result in a transaction.
Crown has appointed UBS as its financial consultant and Allens as its legal counsel for the acquisition proposal.
The private equity firm already owns 9.99% of Crown, which it acquired from MGM Resorts International, an Asian gaming giant, in April 2020 for A$8.15 per share.
MGM initially agreed to purchase a 19.99% stake in CPH Crown Holdings for approximately $1.76 billion in May 2019. The agreement was to be finalized in two phases, with MGM acquiring the initial 9.99% stake shortly after the agreement was reached.
Although this agreement ignited criticism from Australian media outlets against the companies, it prompted the New South Wales Independent Liquor and Gaming Authority to initiate an inquiry into Crown.
The inquiry aimed to determine if Crown was qualified to construct a new integrated resort in Sydney’s Barangaroo, and if not, what modifications were necessary to make it eligible.
The authority also examined whether MGM was suitable in its role as a closely associated entity, and whether the agreement violated the Barangaroo license.
Soon after the inquiry commenced, MGM postponed its acquisition of the second portion of Crown shares, ultimately withdrawing and selling its previously purchased shares to Blackstone.
The inquiry revealed that money laundering had occurred through accounts owned by Crown subsidiaries and within Crown’s own premises.
The inquiry also discovered that owner James Packer had excessive influence over the company, despite not being a director, including personally agreeing and executing the sale to MGM without board approval. Consequently, the board could not guarantee that the deal did not breach Crown’s Barangaroo license.
The inquiry concluded that the evidence of money laundering alone was sufficient to determine that Crown was not qualified to hold the Barangaroo license.
However, Crown could still be permitted to operate the venue if it implemented specific changes.
The regulatory body’s suggestions include: Crown should continue to refrain from collaborating with high-profile groups that haven’t received approval from the regulators, and Packer should cease “remotely controlling” the company, meaning he should stop effectively managing the company despite not being a member of Crown’s board.
Furthermore, the recommendations propose a reorganization of Crown’s board.
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