Apollo Global Management, real estate group eye Crown bids

Blackstone owns 9.99 per cent of Crown and came forward with an offer of $11.85 per share on March 22. Picture: NCA NewsWire / Penny Stephens

Apollo Global Management is said to be weighing up whether to launch a takeover proposal for the $8bn casino operator Crown Resorts, backed by billionaire James Packer.

At least one real estate group is also trying to partner with a casino operator to take on New York-based private equity firm Blackstone in the competition to buy Crown.

Apollo is yet to undertake serious work on a Crown proposal, say sources, but has shown interest.

The challenge for any real estate group looking to partner with a casino operator will be taking on funding powerhouse and expert real estate investor Blackstone, which is way out in front when it comes to carrying out work on Crown and moving towards gaining regulatory approval.

Blackstone owns 9.99 per cent of Crown and came forward with an offer of $11.85 per share on March 22.

However, most say that the buyout fund will need to offer a higher price to be successful.

But another suitor with a better price would need to gain regulatory approval to operate Crown’s portfolio of Australian casinos.

Apollo, which has $US455bn of assets under management, has been actively looking at targets in the Australian market of late.

It is bidding for the casino owner Great Canadian Gaming Corporation and has previously partnered with Oaktree on a recapitalisation plan for Nine Entertainment.

Apollo had lobbed a $3.5bn offer for Tabcorp, excluding its lotteries division, and is known to have looked at the Woolworths-owned Endeavour Drinks business which is mooted for a $10bn-plus demerger in June.

 

Crown owns the real estate at its Barangaroo casino development in Sydney, its casino and two hotels in Perth, along with a golf course, its Melbourne casino and land next door.

Crown considered a $2bn demerger of its real estate about two years ago. So far, Crown has attracted offers from Blackstone, which is advised by Morgan Stanley, and Californian private equity firm Oaktree Capital Management, advised by Jefferies Australia, as revealed by DataRoom on Friday.

On April 19, Crown announced it had a $3bn funding proposal from Oaktree for the board to buy out the stake of Mr Packer, who owns a 37 per cent interest through his company Consolidated Press Holdings.

The Oaktree proposal involves a mixture of debt and equity by way of a structured instrument to enable Crown to buy back all or some of Mr Packer’s interest at a cost that could be cheaper than independent funding.

It effectively values shares in the company at $12 each, above Blackstone’s bid.

However, the Oaktree proposal would be subject to shareholder approval and the question remains whether a buyout of Mr Packer’s stake could be justified by Crown’s directors.

The other group considering a plan to weigh into the competition for Crown is BGH Capital, run by Ben Gray, who looked at the buying the business while an executive at TPG Capital.

While some have questioned whether the Australian private equity fund has the firepower to take on Blackstone, it is worth remembering that BGH has close links with AustralianSuper, although the country’s largest super fund may not be keen to be associated with gambling.

Operators that have looked at Crown before include US-based Wynn Resorts.

Rival Star Entertainment is known to have been running the ruler over the business, but sources say a buyout by Star would be unlikely to work for the stakeholders involved, including the NSW government.

Crown is yet to offer any recommendation on the two proposals it has so far received and the understanding is that the Blackstone camp is becoming increasingly frustrated.

CPH has tapped Moelis for advice and is understood to have fielded inquiries from various groups about the stake in Crown.

Parties are keen to capitalise on Crown’s weak share price, linked to a recent inquiry by the NSW independent Liquor and Gaming Authority that found Crown was not fit to operate its Sydney casino.