Plenty of theories are doing the rounds about what Blackstone is up to with Crown Resorts and its latest bid has revived the idea that Crown’s property portfolio is really its area of focus if it cannot gain approval to buy the whole casino business.
On Friday, Blackstone came up with a $12.50 per share offer, valuing the James Packer-backed casino operator at $8.5bn. 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 and Blackstone later withdrew the offer.
Many still believe that Blackstone faces an uphill battle when it comes to regulatory approval to buy the whole business and Crown has yet to reject or accept the bid.
But the latest offer is continuing to fuel suggestions its motivation is to gain due diligence and the opportunity to strike a deal over the group’s lucrative real estate.
Crown owns the real estate at its Barangaroo casino development in Sydney, its casino and two hotels in Perth along with a golf course, and its Melbourne casino and land next door.
Crown has valued its property, plant and equipment at about $5bn and the theory has been raised before that a bid by Blackstone is to pave the way for negotiations on a deal around the real estate empire.
Market experts believe that the property empire accounts for about $8 of its $9.88 share price before the offer emerged.
The New York-based buyout fund, which has a 9.99 per cent stake in Crown, has always played down that a break-up would be on the cards for the company and has said it is committed to being an operator.
Some say that it would buy the whole company and then focus on a break-up further down the track.
Meanwhile, some believe Mr Packer, a 37 per cent shareholder through his company Consolidated Press Holdings, is a big believer in the future of the business under Steve McCann.
While he needs to sell down to 5 per cent in 2024, he is in no rush. The Australian billionaire is also said to be close to Crown’s chairman Ziggy Switkowski.
One scenario being touted is that Mr Packer sits tight until there is full clarity around approvals next year and holds out for a price of about $15 per share.
This is based on the assumption the share price increases to about $12 per share and a premium of 20 to 30 per cent is added.
He would also want an auction to play out with other suitors – the obvious being Star Entertainment Group.
To outpace Blackstone with a scrip bid, Star would need an offer far higher than the cash bid on the table.
The other challenge to navigate is paying out Mr Packer in cash while other investors receive scrip.
Already, some other investors have indicated that they believe the latest Blackstone offer is not high enough, while others say the board should think about accepting the deal.
But the ball is in Mr Packer’s court.
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