Crown Resorts warms to takeover from US private equity giant Blackstone

Crown shareholders including reclusive billionaire James Packer may finally have a way to get out of the beleaguered casino operator.

Embattled casino operator Crown Resorts has finally warmed to a takeover by US private equity giant Blackstone, paving the way for billionaire major shareholder James Packer to offload his 37 per cent stake.

Crown has previously rebuffed Blackstone twice and refused to engage with rival Star Entertainment Group over its separate merger proposal – even as it faced the excoriating spotlight of multiple investigations of money laundering at its Melbourne and Perth venues.

Crown last month advised it had thrown open its books to Blackstone to allow due diligence, urging it to make a better offer.

That has now unfolded, with the company advising on Thursday that it had received a $13.10 per share or $8.87bn bid, up from $12.50 previously.

“The Crown board considers that it is in the interests of Crown’s shareholders to engage further with Blackstone on a non-exclusive basis in relation to the revised proposal,” it said in a statement to the ASX.

The NSW inquiry concluded James Packer’s influence over the Crown board had ‘disastrous’ consequences. He received special treatment, with briefings on an almost daily basis under a “controlling shareholder protocol”, which was torn up after the evidence emerged.

“Accordingly, Crown has decided to provide Blackstone with the opportunity to finalise its due diligence inquiries and negotiate the terms of an implementation agreement so that Blackstone can put forward a binding offer.”

If that happens, Crown will recommend the offer to shareholders but approval will also be required by casino regulators in Victoria, NSW and Western Australia.

As a result of the damning 2020 NSW inquiry and 2021 Victorian royal commission, Mr Packer is being forced to reduce his stake in Crown to less than 5 per cent.

That first probe concluded his influence over the Crown board – despite no longer being part of it – had “disastrous” consequences as he was the driving force to secure more Chinese junket tours at the centre of the scandal.

Crown gutted its board in response to the scandal and is now chaired by former telco supremo Ziggy Switkowski, while ex Lendlease boss Steve McCann is chief executive. Picture: John Feder/The Australian.

Mr Packer admitted at last year’s Perth royal commission that he did not attend a single board meeting of Crown Perth’s Burswood Ltd between 2013 to 2016 after he moved overseas – the final three years of his chairmanship, which began in 2004.

He conceded there were many “things that should have been done differently” and he should have quit rather than miss those meetings as criminal figures infiltrated Crown’s “VIP” customer base.

Mr Packer claimed he was “not informed” of the risk of such infiltration until after 19 Crown staff were arrested in China in 2016 for marketing the business on the mainland, where gambling is illegal.

“You weren’t keeping an eye on things, Mr Packer,” counsel assisting Patricia Cahill said, which he rejected.

“I should have resigned or attended, I accept that,” he added.

It was the second time Mr Packer testified over the scandal, having fronted the NSW inquiry via video link from his private yacht.

The NSW inquiry resulted in Crown being denied a gaming licence for its brand new Sydney casino, which dominates the skyline with its 275m tower on the Barangaroo waterfront. Picture: NCA NewsWire/Nikki Short

The Perth probe will hear closing submissions on February 1 and 2, with findings due in March.

The Victorian royal commission stopped short of stripping Crown Melbourne of its gaming licence, even though it was found not suitable to continue to hold one, instead imposing a two-year deadline to prove to a new “special manager” that it has returned to suitability – effectively putting it on probation.

The earlier NSW inquiry resulted in Crown being denied a gaming licence for its new $2.2bn Sydney casino, but restaurants and the city’s first 6-star resort in the complex are trading while sales of luxury apartments have provided crucial cashflow during the pandemic.

Crown told its investor day presentation last month that $1.1bn in gross sales and pre-sales commitments had been received for the apartments, representing 85 per cent of them.

Crown Sydney’s lavish restaurants fired up their kitchens in December 2020. Picture: James D Morgan/Getty Images.

It also said it was in ongoing discussions with NSW’s Independent Liquor and Gaming Authority and was “targeting a gaming floor opening early in the new year”.

Shares in Crown surged more than 8 per cent to $12.65 in intraday trade, having climbed as high as $12.68.

The shares fell to as low as $6 in March 2020 as its public relations nightmare unfolded in earnest after eclipsing $17 back in 2014.