Blackstone bid for Crown Resorts could be up to $15 a share: Credit Suisse

Blackstone could pay up to $15 per share in its takeover bid for Crown Resorts and achieve returns comparable to those already enjoyed by its real estate investment vehicle.

Blackstone earlier this month lobbed a $12.50 per share, all-cash offer for the James Packer-backed casino operator, its third takeover attempt. It was 15c per share higher than one rejected in May. Picture: AFP

Blackstone could pay up to $15 per share in its takeover bid for Crown Resorts and achieve returns comparable to those already enjoyed by its real estate investment vehicle, according to Credit Suisse.

But that price assumed “perfect execution” of the deal, including separating the business into an operating company and a property-owning real estate outfit.

“Given the regulatory environment, many of these actions may not be permitted in full or in-part,” Credit Suisse analysts Larry Gandler and Bradley Beckett wrote.

Blackstone earlier this month lobbed a $12.50 per share, all-cash offer for the James Packer-backed casino operator, its third takeover attempt. It was 15c per share higher than one rejected in May.

But the gaming company has yet to allow Blackstone exclusive due-diligence as requested.

The Crown offer is being jointly made by the American investment giant’s real estate and private equity businesses.

The Australian last week reported that Blackstone had directly approached Mr Packer’s private vehicle, CPH Holdings, in a bid to push the negotiations forward.

Mr Gandler and Mr Beckett, in a note to clients, said they expected Blackstone to modify its proposal and speculated on another casino operator entering the contest for Crown. “Las Vegas Sands has liquidity and stated it is interested in acquiring resorts in the US and Asia,” they wrote.

“Given the regulatory environment that may inhibit the casino industry’s ability to separate assets, we think Crown’s board will negotiate an agreed deal with Blackstone,” the note reads.

“We think the likelihood is that the separation of (Crown)’s assets into different streams is unlikely to be permitted … in this regulatory environment. Assuming Blackstone shares that view, it is more likely it will hug the lower end of the valuation range in making proposals to (Crown).”

The Credit Suisse note also noted that there was likely to be a lack of other bidders, with Asian casino operators likely to “experience long delays of fail to achieve probity in Australia”. “This has been observed already,” they said.

Melco Resorts, backed by Hong Kong gaming tycoon Lawrence Ho, bought into Crown in 2019, taking a stake in the company from Mr Packer.

It had expected to acquire the company, but the bid was instead the subject of NSW regulatory reviews because of allegations about Melco’s links to criminal groups.

Other suitors included Wynn Resorts, which in 2019 entertained a short-lived $10bn bid, and Star Entertainment, which earlier this year had proposed a merger.

Blackstone, the world’s largest private equity operator, has a 9.99 per cent holding in Crown, which it acquired from Melco for $8.15 a share in April last year.

The Blackstone bid for Crown is subject to conditions including that the firm undertakes due diligence for four weeks and receives a unanimous board recommendation in favour of the offer. Blackstone also requires final approval from its own investment committees. Crown is being advised by UBS and Gresham. Blackstone has engaged Morgan Stanley.