Crown Resorts in push to open Sydney casino amid Blackstone bid

Officials from the NSW regulator met with Crown Resorts on Monday as the James Packer-backed casino operator pushes to re-open its shuttered Sydney gaming floor.

The Blackstone offer is conditional on a unanimous recommendation from the Crown board, and regulatory approval from casino regulators in Victoria, NSW and Western Australia. Picture: NCA NewsWire/Dylan Coker

Officials from the NSW regulator met with Crown Resorts on Monday as the James Packer-backed casino operator pushes to re-open its shuttered Sydney gaming floor.

The Independent Liquor and Gaming Authority, which in February was handed a report concluding Crown was unsuitable to operate a casino in the state, had originally indicated it expected an agreement for the opening of the gaming floors by November.

Crown on Friday said it had received a $12.50 per share, all-cash takeover offer from Blackstone, the third attempt from the American private equity giant to acquire the company. The resolution of concerns around a gaming licence, sources close to Crown said, would clear some uncertainly and put pressure on Blackstone to return with a higher offer.

Some in the market, however, see the Blackstone bid as opportunistic, with Star Entertainment Group – which also made an offer for Crown last year – stuck with its own regulatory issues.

Analysts at Ord Minnett, in a note to clients on Monday, said they believed Crown was likely to reject this bid “for various and differing reasons, being valuation, regulatory or otherwise”.

“The inherent appointment of a special manager during Crown’s transformation period may alone be enough for regulator (or Crown) to deem this latest offer as too soon,” the analysts wrote.

“Crown has rejected bids previously due to timing (and price), and we reiterate the additional level of decision-making required for approval.”

The Blackstone offer is conditional on a unanimous recommendation from the Crown board, and regulatory approval from casino regulators in Victoria, NSW and Western Australia.

The ILGA will also need to allow the Barangaroo casino to operate before December 2022.

Blackstone’s pitch to Crown investors is that the all-cash bid, a 26 per cent premium to the previous close and valuing the company at $8.5bn, would remove the uncertainty of any future regulatory action including from the WA royal commission.

A similar inquiry run by Ray Finkelstein in Victoria recommended Mr Packer sell down his 37 per cent stake in Crown to less than five per cent by 2024.

In particular, Blackstone has told Crown it could conclude due-diligence on the company by Christmas and expected to have all regulatory approvals in place in the first three months of 2022.

Ord Minnett, in its analysis, raised the prospect that Star could be brought into operate the casino if the Blackstone bid is successful. “Star finds itself the subject of regulatory scrutiny and, as such, is unlikely to table a counter offer for Crown,” they wrote. “If this Blackstone offer eventuates, however, then the situation may still play in favour of Star if the company is asked to manage the new operating company on the US company’s behalf.”

Blackstone’s bid came weeks after the Victorian royal commission recommended Crown keep its flagship Melbourne casino licence despite a number of legal and ethical breaches. The WA royal commission is not expected to release its report until March.

Crown declined to comment. Earlier this month, the company told Sky News that it had developed a “comprehensive remediation plan” in response to the ILGA inquiry findings and believed it had “made good progress in implementing the reforms”. The ILGA report concluded the company needed to make sweeping cultural changes and found “poor corporate governance” and “deficient risk-management”.