Blackstone sweetens Crown bid

The private equity company is believed to have improved the price of its non-binding offer to above $12 a share which values the company at more than $8.1bn.

Crown faces a new takeover from Blackstone. Picture: NCA NewsWire / David Crosling

US private equity giant Blackstone has boosted its $8 billion takeover proposal for Crown Resorts in a bid to end the seven week stalemate over its initial approach for the company.

The suitor is stepping up its efforts to win control of the company and is upping its bid even while the target company remains mired in regulatory uncertainty, with two state royal commissions, in Victoria and Western Australia, investigating Crown.

In a letter sent to Crown chair Helen Coonan over the weekend, Blackstone lifted its cash bid from $11.85 per share for the company into the $12 range, sources said.

But investors have suggested even more may be required to seal a takeover. At Friday’s close of $12.12, Crown was valued at $8.2bn.

Much will also depend on the stance taken by tycoon James Packer, who controls 37 per cent of the company, but is not party to negotiations between Blackstone and the Coonan-led Crown board.

Mr Packer has previously indicated he is open to the sale and has retained Moelis Australia as an Adviser.

Blackstone is keen to gain a foothold in the market and use its global experience in owning and operating integrated casino and hospitality venues in the US and Europe.

The US private equity group is pitching itself an integrated casino owner rather than planning a quick fire spin off of the $4bn property empire that Crown controls, signalling its long term ambitions in the market.

If Blackstone won control of Crown it would pivot away from its now discredited junkets operation and seek to broaden Crown’s domestic custom as Chinese high rollers have been cut off by border closures.

The private equity group is making the price sweetener after last month revising the terms of its $8bn buyout offer by effectively taking on risks associated with the outcomes of two royal commissions and the NSW review.

This would put it on track to complete the deal by the third quarter of this year while sanctions from the inquiries may take until next year to be applied.

A royal commission into Crown’s suitability to operate its Melbourne casino was launched in Victoria in March, with hearings to resume next week.

The suitor is believed to have improved the price of its existing non-binding offer in the letter sent to Ms Coonan.

Helen Coonan in front of the Crown Sydney earlier this year. Photographer: Adam Yip

Blackstone also improved its offer by dropping several conditions associated with the bid.

The private equity major has been frustrated by the continued refusal of the Crown board to engage on its approach. It is believed that it sent a new offer to Crown over the weekend with an improved price with other conditions left unchanged.

Some Crown investors are yet to be enticed by the offer for the beaten down company and told The Australian that they are expecting at least $13 per share.

They also expressed doubts that Blackstone would be able to execute a takeover prior to the findings of the two state royal commissions being resolved and objected to the suitor gaining control at the company’s discounted level.

Some shareholders may even hold out for $14 per share but at this level the attraction may fade for Blackstone and other suitors backed by cheap debt even if they believe they can turn the casinos around.

Under the changes made last month Blackstone said its offer hinges only on receiving regulatory approval for the takeover, with the additional stipulation that it can withdraw its bid if state regulators threaten to or make “material adverse change” to Crown’s casino licences before the second court hearing of the takeover process.

Crown is yet to formally acknowledge the updated bid but the board will likely meet either late Sunday or early Monday to consider the proposal.

An ASX announcement is likely to land on Monday morning along similar lines the gaming company has made in recent months.

Crown is being advised by UBS while Blackstone has Morgan Stanley in its corner.

A royal commission into Crown’s suitability to operate its Melbourne casino was launched in Victoria in March, with hearings to resume next week.

Blackstone expects to receive probity approval to take over Crown from each of the state gaming regulators by the third quarter of 2021.