Crown Resorts’ latest play an effort to get Blackstone to bid against itself

There is Blackstone or the bush, and the board of Crown knows it. Picture: NCA NewsWire/Penny Stephens

Last Monday former telco whizz-kid Ziggy Switkowski formally joined the board of the Crown casino group after getting all the necessary regulatory approvals.

Two days later on Wednesday, his fellow directors elected him chairman as planned.

Former federal public servant Jane Halton who’d filled the gap – with the formal title of ‘interim chairman’ – since the departure in August of former federal minister Helen Coonan (who’d been the executive chairman) will continue as a non-executive director.

Now there’s a lot of ‘formers’ in there. Switkowski might have immediately embarked on adding another one to his name; that of ‘former chairman of Crown’.

For the very first thing he did as chairman, was to announce the very next day on Thursday that Crown had now embarked on selling itself to the biggest investment group in the world, Blackstone.

Assuming that happens, the chairmanship of Crown would then be in the gift of Blackstone – and of course, the regulators in Victoria, NSW and WA. They could very easily ‘suggest’ a Blackstone-owned Crown ‘keep’ Switkowski as chairman, assuming he was willing.

Now, Crown did not actually announce it had embarked on selling itself to Blackstone. Its statement carried the innocuous-sounding title “Update on the acquisition proposal from Blackstone”.

But it was really announcing there were no other bidders; and certainly not ones that would embark on a bidding war with Blackstone starting at the Blackstone $12.50 price.

When you cut through the words used to ‘reject’ that price, the board understands three very basic things.

One, there are no other bidders at a more compelling – and critically, deliverable, price.

Two, they have to try to get Blackstone ‘to bid against itself’, and in that James Packer and his 35 per cent shareholding is utterly pivotal.

Three, in the world of Covid and a very different China than the one that used to pour high rollers – and indeed, not-so high rollers – and even more their millions into Melbourne, there is a limit to how much more they can extract from Blackstone.

Especially as Blackstone is being led by home-town boy James Carnegie, son of former CRA (now Rio Tinto) boss and builder Sir Rod Carnegie – who in turn had also been a partner and close friend of Melbourne Cup legendary owner Lloyd Williams, who almost literally built the casino in Melbourne, certainly lavish fitting by lavish fitting, and had in turn been close friend and partner of Kerry Packer, father of course of James.

This is not to suggest either that James P will favour James C with his controlling stake, or that James C is just doing it all to favour James P.

No, Carnegie is acting as a completely clinical investor; and Packer wants to sell to the highest bidder, but a bidder that can credibly and reasonably quickly complete the transaction.

That looks like Blackstone. Indeed, that can only be Blackstone.

This was more or less conceded in the Crown statement; although you do have to know how to read it and also, the broader – competitive and regulatory – context.

First-off, it had been nearly two weeks since Blackstone launched its latest offer. There was no reference to any other approach, nor even the sniff of an approach.

Competitor Star Entertainment had launched, in May, a ‘competing’ all-paper non-premium offer; and withdrawn it, in July.

Star is not coming back. It can’t compete against Blackstone’s cash; it can’t offer a premium or it would shred its own share price; it would be tangled in regulatory issues six ways to Sunday.

Earlier in the year, a classic main-chancer Oaktree had made an innovative – read: ludicrous – proposal to fund Crown buying out Packer. We’ve heard no more of that.

In short, there is Blackstone or the bush, and the board of Crown knows it; and they should also know that Carnegie has the home-town advantage of knowing exactly how to play all the regulatory issues.

Indeed the new offer statement revealed that Carnegie had already cleverly embarked on doing exactly that; so that Blackstone is very close to giving Crown – and, critically, Packer – a ‘clean’ offer.

Carnegie has ‘got’ Crown nailed and the board of Crown knows it. They are trying to do the only thing an auctioneer can when confronted by only one bidder: desperately try to get the bidder to bid against itself.

There was only a very guarded ‘rejection’ of the Blackstone offer price. Crown said it did not represent “compelling value”.

But in order to facilitate a “revised proposal” that “adequately” – not “compellingly”? – reflected Crown’s value, Crown has “offered” Blackstone access to non-public info.

The rest was yada, yada, yada.

We will go through a formal corporate minuet; no left-field shocks surfacing, Blackstone will add maybe 20c, maybe 30-40c if the world looks convincingly like getting past Covid; the board and Packer will find that “adequate”.