After the offer was sweetened to A$8.87 billion ($6.46 billion), the board of Australia’s largest casino operator, Crown Resorts, indicated today that it is likely to support a buyout deal from US private equity firm Blackstone. The buyout group, which currently owns 10% of Crown, increased its offer to A$13.10 per share from A$12.50 in November, and is expected to be approved unless a better offer comes.
Crown has said it will now engage with Blackstone after describing its previous bid as “uncompelling” and will recommend to shareholders that the bid be accepted. The deal comes after Crown was found to be unsuitable to operate its Sydney casino and given two years to address a catalogue of issues related to its Melbourne casino, including tax and anti-money laundering problems.
The increased offer positions Blackstone as the front-runner to acquire Crown, with indications that a deal might be reached by the end of January. An agreement to sell to Blackstone would also provide an exit for Crown’s largest shareholder, James Packer, who owns approximately 36% of the firm but has withdrawn from corporate life in recent years due to mental health difficulties.
The acquisition still needs clearance from three Australian state gambling authorities and a shareholder vote, but it may be finalized by the end of June.
On the news of the amended Blackstone offer, Crown shares gained 9% to A$12.68, their best price since June 4, but still below Blackstone’s offer, showing market skepticism about a rival bid. With an initial offer of A$11.85, Blackstone launched its first move for Crown in March of last year. That, along with a following offer in May, were both turned down as being too low. In July, rival Australian casino operator Star Entertainment Group backed out of a proposed merger with Crown, and an offer from Oaktree Capital Management LP to support the buyout of Packer’s interest was also turned down.