Blackstone’s bid for Crown is finally a goer: Will Packer support it?

By Market Index
Mon 14 Feb 22, 2:56pm (AEDT)

Key Points

  • Crown's board has recommended shareholders accept a $13.10-share—binding offer from Blackstone
  • A shareholder vote requires minimum 75% shareholder approval
  • Crown’s interim result, due out 17 Feb, is expected to be heavily covid-disrupted

The share price in Crown Resorts (ASX: CWN) was up 2.02% an hour after lunch today following revelations that the casino giant’s board has recommended shareholders accept a $13.10-share—binding offer from Blackstone.

While Blackstone’s fourth offer values Crown at around $10bn, including debt, there is still no indication whether James Packer – who controls a 37% stake in the business through Consolidated Press Holdings – will support the takeover offer.

Certainty of value

A scheme of arrangement requires a shareholder vote and a minimum 75% shareholder approval. Beyond Packer, Blackstone is Crown’s second largest shareholder, with 9.99%.

The takeover scheme represents a 32% premium to Crown’s closing price of $9.90 per share on 18 November last year, which was the last trading before the US private equity firm first took a crack at Crown at $12.50 a share.

Commenting on the offer, Crown’s chairman Ziggy Switkowski noted that Blackstone’s all-cash offer “provides shareholders with certainty of value.”

To help put Blackstone’s $13.10-share in context, it’s important to note that at their peak, the casino giant has struggled to trade north of $12.76 a share.

Take the money and run

Given that Crown is successfully addressing a myriad of issues brought about by both covid and regulatory processes, Switkowski was quick to remind the market that considerable uncertainty lingers around both of these challenges.

In light of these challenges, Switkowski believes it's in the best interest of shareholders to accept Blackstone's offer.

Anyone for anymore?

Given the regulatory issues confronting Star Entertainment Group (ASX: SGR), it’s unlikely if the rival casino can stump up with a higher or better bid offer. While Star made a scrip-laden offer for Crown last year, it would clearly require more from co-investors than they may be comfortable with.

Meantime, it’s understood there’s no shortage of banks queuing up to debt finance Blackstone’s bid.

Shareholder approval aside, the Blackstone deal still needs the green light from both the Australian Foreign Investment Review Board (FIRB) and gaming regulatory authorities.

The scheme of meeting is set down for some time in the second quarter of 2022.

Brokers expect Crown’s interim results for the first half year ended 31 December 2021 – due out 17 February - to be heavily covid-disrupted.

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