Crown says likely to back improved A$8.9b Blackstone buyout offer

[SYDNEY] Australia's biggest casino operator, Crown Resorts, said on Thursday (Jan 13) its board was likely to back an improved A$8.9 billion (S$8.7 billion) buyout proposal from US private equity firm Blackstone unless a higher offer emerged.

Crown received a fourth non-binding offer of A$13.10 a share, having dismissed Blackstone's previous bid of A$12.50 as not "compelling".

A person with direct knowledge of the matter told Reuters the near 5 per cent price rise agreed after initial due diligence was supported by major investors, including founder James Packer, who collectively own around 60 per cent of Crown stock.

There are hopes of signing a deal by January-end, said the person, who was not authorised to speak publicly on the matter and so declined to be identified.

Investment manager Perpetual, Crown's 3rd-largest shareholder with a 9.2 per cent stake, said it was in favour of the revised proposal in the absence of a better offer.

Packer, who holds 37 per cent, did not respond to a request for comment. Blackstone, which owns 9.9 per cent, declined to comment.

The deal, which requires approval from casino regulators in 3 Australian states and a shareholder vote, could be completed by the end of June, said a second person familiar with the matter.

Crown shares jumped as much as 9 per cent to A$12.68 on Thursday morning, their highest price since Jun 4, but still well below Blackstone's offer indicating market doubt about a rival bid.

The revised offer puts Blackstone in the box seat to win control of Crown, which has faced devastating misconduct inquiries in every state it operates in, while protracted Covid-19 lockdown measures has caused a drop in visitors.

Following the latest offer, the casino operator said it will engage with Blackstone on a non-exclusive basis and give the investment manager the opportunity to finalise due diligence.

Crown said if Blackstone makes a binding offer of at least A$13.10 per share and if there are no superior offers, its board intends to recommend shareholders vote in favour of the proposal.

"It is likely that a deal will get done," said Steve Johnson, chief investment officer at Forager Funds Management, which owns Crown shares.

"The increase in offer price is a welcome step in the right direction and we are supportive of the board continuing a push for an appropriate firm offer for shareholders," he said.

After an inquiry in July last year urged Crown be stripped of its gambling licence for its main Melbourne resort, Australia's 2nd-biggest casino operator Star Entertainment Group withdrew a A$9 billion mostly scrip buyout proposal.

Star, subject to a separate regulatory inquiry over its actions to counter money laundering, has left open the possibility of re-entering the fray. In an emailed response to Reuters on Thursday, it reiterated it "remains open to exploring potential value enhancing opportunities with Crown".

Crown remains open to talks with Star and expects its peer to have more room to manoeuvre after the regulatory inquiry wraps up, said a 3rd person familiar with the matter.

Public hearings on Star are due to begin in March.

REUTERS