Blackstone takeover bid pushes Crown Resorts’ shares to one-year high

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Summary

  • Hotel industry and casino pioneer Crown Resorts has received a 100% acquisition offer from the Blackstone Group Inc.
  • Blackstone currently holds 9.99% stake in Crown, with remaining stake to be acquired at a price of AUD 11.85 cash per share provided certain conditions are met.
  • The announcement led to the largest single day share price uptick of 16% for the company in almost a year’s time.

Shares of hotel chain Crown Resorts (ASX:CWN) are trading higher as the company received an acquisition proposal from Blackstone. The company stated that it received an unsolicited, non-binding and indicative proposal, from the Blackstone Group Inc.

The proposal entails full acquisition of Crown Resorts at an indicative price of AUD 11.85 cash per share, valuing the casino giant at $8 billion. However, this indicative price would be reduced by the value of any dividends or distributions declared or paid by the company.

Following the announcement, shares of Crown soared as much as 16%. The company is currently trading at AUD 11.59 per share, its highest in almost a year’s time. This also marks the highest single-day uptick for the company as its share prices had been adversely affected by the pandemic and had failed to show any improvement.

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The Proposal Details

The indicative price represents a premium of 19% to the volume-weighted average price of Crown shares since the company last released its results for 1HFY21. The proposal entails certain conditions to be met, with due diligence and arranging debt finance being the prime criteria.

Additionally, a unanimous board decision in favour of the proposal is required before it can be adopted. The proposal would also require a binding Implementation Agreement including conditions like Blackstone receiving regulatory confirmation about Crown’s suitability to own and operate the Sydney, Melbourne, and Perth licences post acquisition as well as other gaming-related approvals.

Lastly, the proposal depends on an approval from Blackstone investment committees. The current offer has been issued by a company on behalf of funds managed and advised by Blackstone.      

RELATED READ: Crown Resorts’ (ASX:CWN) Perth’s ability to possess casino licence to be tested in WA royal commission

The Company Response

In response to the proposal, Crown has not yet taken a firm position. The company is yet to decide; however, it will soon commence the necessary procedures to come up to a conclusion. The process would also involve active participation of the relevant stakeholders including regulatory authorities.

Blackstone currently holds a 9.99% stake in Crown Resorts, acquired from Melco Resorts & Entertainment Limited at AUD 8.15 per share in April 2020.

The company is of the view that shareholders must not act based on the proposal as it is not yet confirmed whether the casino titan would go ahead with the transaction or not. Meanwhile, Crown has appointed UBS as a financial advisor and Allens as a legal advisor to decide on its stand regarding the acquisition proposal.


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