Blackstone walks away from tilt at Crown Resorts

Blackstone came forward with a bid of $11.85 per share or $8bn for Crown on March 22 that was rejected by Crown’s board. Picture: Getty Images

Blackstone is understood to have walked away from James Packer-backed casino operator Crown Resorts with the New York buyout fund not planning to return with any new offer for at least 18 months.

Blackstone’s view is that Crown is not currently in an investible state.

Any deal is not likely happen until about two years, if it was to occur, say sources.

Blackstone came forward with a bid of $11.85 per share or $8bn for Crown on March 22 that was rejected by Crown’s board.

Since that time, Crown’s shares have fallen to $10.32.

It now remains to be seen if Blackstone divests its 9.99 per cent holding purchased in Crown during 2022 for $552m.

Other global suitors are also said to be holding off on any plans to throw their hat in the ring for the business.

Earlier, other private equity firms had also been circling the business, while rival Star Entertainment made a bid.

Star itself is now at the centre of investigations surrounding money laundering at its casinos and a bid for Crown is off the table.

Deterring buyers of Crown has been its case with the Australian Taxation Office that wound up in the Federal Court, royal commissions and an investigation by Austrac into its operations over various allegations including money laundering.

Royal commissions and Austrac investigations also meant Crown keeping its casino licences in Perth, Sydney and Melbourne will involve material expenses and operational costs.

Shrinking revenue and greater operating expenses linked to higher regulatory standards are seen as deterrents for private equity buyers such as Blackstone.

Private equity experts also say that once a deal has fallen over, typically it is then difficult to gain approval from the investment committee in such major global private equity firms for a second attempt at a target.

Suitors will also now need regulatory approval to buy more than 5 per cent of the casino operator.

James Packer has until September 2024 to reduce his 37 stake to less than 5 per cent following directions of the Victorian royal commission.