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Crown Resorts to back $6.5 billion buyout offer from Blackstone

Blackstone raises proposal about 5% after initial due diligence as shares of casino operator Crown Resorts jumped as much as 9%.

Crown Resorts to back $6.5 billion buyout offer from Blackstone

Australia’s biggest casino operator, Crown Resorts Ltd, said on Thursday its board was likely to back an improved A$8.87 billion ($6.46 billion) buyout proposal from U.S. private equity firm Blackstone Inc unless a higher offer emerged.

Crown received a fourth non-binding offer of A$13.10 a share, having dismissed Blackstone’s previous bid of A$12.50 as not “compelling“.

A person with direct knowledge of the matter told Reuters the near 5% price rise agreed after initial due diligence was supported by major investors, including founder James Packer, who collectively own around 60% of Crown stock.

There are hopes of signing a deal by January-end, said the person, who was not authorised to speak publicly on the matter and so declined to be identified.

Investment manager Perpetual, Crown’s third-largest shareholder with a 9.2% stake, said it was in favour of the revised proposal in the absence of a better offer.

Packer, who holds 37%, did not respond to a request for comment. Blackstone, which owns 9.9%, declined to comment.

The deal, which requires approval from casino regulators in three Australian states and a shareholder vote, could be completed by the end of June, said a second person familiar with the matter.

Crown shares jumped as much as 9% to A$12.68 on Thursday morning, their highest price since June 4, but still well below Blackstone’s offer indicating market doubt about a rival bid.

The revised offer puts Blackstone in the box seat to win control of Crown, which has faced devastating misconduct inquiries in every state it operates in, while protracted COVID-19 lockdown measures has caused a drop in visitors.

Following the latest offer, the casino operator said it will engage with Blackstone on a non-exclusive basis and give the investment manager the opportunity to finalise due diligence.

Crown said if Blackstone makes a binding offer of at least A$13.10 per share and if there are no superior offers, its board intends to recommend shareholders vote in favour of the proposal.

“It is likely that a deal will get done,” said Steve Johnson, chief investment officer at Forager Funds Management, which owns Crown shares.

“The increase in offer price is a welcome step in the right direction and we are supportive of the board continuing a push for an appropriate firm offer for shareholders,” he said.

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