James Packer gets his billion dollar payday

James Packer has finally got what anyone who’s ever been to a Saturday property auction knows what any seller desperately wants.

Billionaire James Packer now has options in terms of the sale of his Crown Resorts empire. Picture: Aaron Francis

James Packer has finally got what anyone who’s ever been to a Saturday property auction knows what any seller desperately wants - two determined bidders with deep pockets.

Unlike, though, those Saturday auctions, the bids are not straight head-to-head cash and let the highest win.

The biggest investment group in the world, Blackstone, is offering straight cash – now, $12.35 per Crown share.

Star is offering the upside of a virtual Australia-wide casino monopoly – only a couple of small casinos like Hobart’s Wrest Point would be outside their group.

I don’t think and clearly neither does Star – it wouldn’t have made the offer if it thought otherwise – that the competition regulator the ACCC would knock it back.

After all Star’s casinos don’t really compete with Crown’s.

That’s except for high rollers and especially those from China, the source, as we know, of all Crown’s (and Packer’s) recent, ahem, “difficulties”.

But really, when will they come back? Be allowed to come back?

In any event, that is not or should not be the ACCC’s concern. Should it really be worried if Chinese billionaires get fewer perks, like smaller suites or having to share executive jets, because Crown is no longer trying to lure them away from Star and vice-versa?

I would also suggest that both bidders would have little or no difficulty getting through the maze of probity and other regulatory approvals.

So it should come down to a straight head-to-head battle on price.

How much are they each prepared to offer?

How do you compare straight cash from Blackstone against shares in a merged Star-Crown, at the ratio on which they end up being offered?

And most crucially, which one does Packer go for?

His 37 per cent is almost enough on its own to deliver victory to one of the bidders; it is certainly enough to the bids.

I am of course, taking it as read, that he wants out.

I’m also taking it as read, that the price being offered is now in his “selling zone,” albeit a lot less than he could have got a few years ago.

He would like more, of course; every seller is happy to get more than their reserve price.

There is – a little - more upside, but it’s limited by the nature of the Star offer of its own shares.

Star is presenting its offer as a “nil premium” true-style merger of equals.

That’s to say, it’s not offering a takeover premium to Crown holders; but the - shared – benefits of the merger upside; with Crown holders to get 60 per cent of that upside and existing Star holders 40 per cent.

Yes, Crown holders can take up to 25 per cent in cash upfront - $12.50 a share as against Blackstone’s $12.35 for all their holding.

With Star trying to persuade them that the shares they get in the merged Star-Crown would be worth more than $12.50 per existing Crown share.,

Packer – as now simply a non-controlling hands-off shareholder - has committed to working with Crown.

I think, again, he and executive chairman Helen Coonan and her key advisor Kelvin Barry of UBS will come to an agreed conclusion.

In times past, you would have backed Packer going for the Star merger.

It was not that long ago he tried to take Star over and this proposal would allow him to pocket over $1bn of cash and emerge as the dominant, but not quite controlling, shareholder in the Australian casino monopoly he always lusted after.

But that was a very different Packer in a very different era.

If he – and Crown – ended up opting for the Star proposal, his stake in the enlarged group would become either a long-term investment or a key holding to be sold at the optimum time.