• Crown shares jump 19% in Monday’s session
• Blackstone offers $9.16 a share – 20.2% above Friday’s close
• Offer includes conditions like regulator approval
• The move follows regulator refusal to grant Crown’s new Sydney casino a licence

Blackstone, the private equity operator, has tabled an unsolicited $6.2 billion bid for Crown Gaming in Australia.

The James Packer-led gaming company had sailed in choppy waters lately, especially when Australian regulators refused to grant a licence for its state-of-the-art new casino in Sydney.

Highlighting that the company was not fit to hold a licence, the news prompted the CEO and most of the board to quit.

Sensing that now was perhaps the perfect moment to strike, Blackstone made the conditional offer of $9.16 a share, a 20.2% premium on Friday’s closing price.

Crown Resorts shares jump

The news met with a favourable market response, with Crown’s share price jumping by 19% in Monday’s morning session.

A statement from Crown confirmed: “(Crown) announced that yesterday it received an unsolicited, non-binding and indicative proposal from a company on behalf of funds managed and advised by The Blackstone Group Inc. and its affiliates (together, “Blackstone”), to acquire all of the shares in Crown by way of a scheme of arrangement at an indicative price of A$11.85 cash per share (the “Proposal”).

“The indicative price will be reduced by the value of any dividends or distributions declared or paid by Crown. The indicative price of $11.85 cash per share represents a premium of 19% to the volume-weighted average price of Crown shares since the release of its 1H FY21 results.”

The statement confirmed conditions for the bid, including due diligence, arranging debt finance, and a unanimous Crown board recommendation and vote in favour of the proposal. It also needed regulator confirmation that Blackstone would be considered suitable to operate the licences in Sydney, as well as Crown’s casinos in Perth and Melbourne.

Minority stake

Blackstone already holds a minority stake in Crown after it purchased 9.99% of shares from Melco Resorts and Entertainment in April 2020.

It is not known how billionaire James Packer will view the bid, even if it is a convenient exit strategy. He has previously made it known he wants to reduce his exposure in Crown, but it is possible he doesn’t want to wipe his hands completely.

Sources within Crown say there is a feeling that the Blackstone bid does not value the company high enough – and the company could play a waiting game to see if the new interest prompted other inquiries.

Blackstone is based in New York and was founded by the former Lehmann Brothers investment bankers Peter Petersen and Stephen Schwarzman.

Crown shareholders do not have to make any decisions about the approach at this stage.

Meanwhile, Crown has appointed UBS as its financial advisor and Allens as legal advisor concerning the approach.