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Highlights
- The FIRB nod is the first step towards Crown Resorts acquisition by US-based Blackstone Group.
- The takeover still requires approval by relevant regulators and the shareholders of Crown.
- In was in February, that Crown entered a scheme implementation deed with Blackstone.
- Crown will be selling all its shares to Blackstone for AU$8.9 billion.
Australian gaming and entertainment giant, Crown Resorts Limited (ASX:CWN), had an important update to share with the market participants today that pushed its share price up on the ASX.
The shares closed today’s session at AU$12.730 per share, up 1.031% on the ASX. The market capitalisation stands at AU$8.53 billion.
Crown, on Tuesday, declared that the Australian government's Foreign Investment Review Board (FIRB) has given clearance to the US-based private equity firm Blackstone's to acquire all the shares in Crown Resorts.
In the midst of rising instances of COVID-19 and the Ukraine- Russia conflict, the consumer sector has seen a decent month of growth. The share price of Crown gained 3% in one month.
Crown has had a solid year, with an increase of 8%, in line with the overall consumer sector. Crown's share price has gone up by 6% since the beginning of the year, and it has surged by 35% in the last six months.
Image source: © 2022 Kalkine Media®
Good read: Crown Resorts (ASX:CWN) shares fall as AUSTRAC begins civil proceedings
About the companies
Crown manages and owns some of Australia's most prestigious integrated resorts, Crown Perth, Crown Melbourne, and Crown Sydney. Crown Sydney is the newest luxury hotel resort and dining precinct offered by Crown.
Blackstone is a global investment firm that invests resources on behalf of individuals, big institutions and pension funds.
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Blackstone gets FIRB's nod
Blackstone has notified the Crown that it has obtained written confirmation from the FIRB (Foreign Investment Review Board). The Commonwealth Government has no objections to Blackstone's proposed purchase of Crown via the proposed scheme.
Moreover, the scheme's implementation is subject to several other terms and conditions, laid out in the scheme implementation deed. Court permission, Gaming Regulatory Authority approval and Crown shareholder approval are the three prerequisites.
Crown & Blackstone enter into the implementation deed
On 14 February 2022, Crown stated that it had entered a scheme implementation deed with Blackstone. Crown stockholders will receive AU$13.10 in cash per share (scheme consideration) under the scheme of arrangement.
In addition, with the scheme consideration, Crown's equity value increases by more than AU$845 million over Blackstone's first offer of AU$11.85 per share in March 2021.
On this note, Ziggy Switkowski, Crown's Chairman, marked:
Bottom line
In terms of performance, Crown has been on a steady upward trajectory. Hence, the FIRB's approval of Crown's acquisition by Blackstone is significant in the business.
Good read: Crown Resorts (ASX:CWN) shares fall as HY22 loss widens due to COVID-19
