Private equity management firm Blackstone Inc has upped by 4.8 percent its cash offer to acquire all the shares of Australian casino operator Crown Resorts Ltd.
It now values the target at AUD13.10 (US$9.54) per share, compared to the AUD12.50 Blackstone offered when it made a sweetened takeover bid on November 19.
It is the fourth time in 12 months that Blackstone has made a play for Crown Resorts. The suitor offered AUD11.85 per share in March last year, and AUD12.35 per share in May.
Crown Resorts had said in a December 2 filing to the Australian Securities Exchange that the November 19 bid had not represented “compelling value” for its shareholders.
Crown Resorts stated in a Thursday filing, confirming the revised offer, that after mulling it, including obtaining advice from its financial and legal advisers, “the Crown board considers that it is in the interests of Crown’s shareholders to engage further with Blackstone on a non-exclusive basis.”
The casino firm said Blackstone had made its revised proposal “after considering non-public information provided by Crown during initial due diligence”.
Analysts Don Carducci and Michael James at JP Morgan Securities Australia Ltd said in a Thursday note it seemed there were “fewer skeletons in the closet” regarding due diligence on Crown Resorts “than feared”.
They added: “Given the bidder was granted non-public due diligence, it is noteworthy to see them increase the offer price by approximately 5 percent, alleviating the fear of lingering surprises.”
JP Morgan estimated that Crown Resorts’ 2022 earnings before interest, taxation, depreciation and amortisation – judged on core operating business and after rent – would be AUD205 million.
Crown Resorts said in its Thursday announcement that – should Blackstone make a binding offer for “no less than AUD13.10 cash per share” – then, subject to a binding agreement on terms and conditions, “it is the Crown board’s current unanimous intention to recommend that shareholders vote in favour of the proposal in the absence of a superior proposal” and subject to an assessment by an independent expert.
Any deal would be subject to Blackstone “receiving final approval” from the respective casino regulators in the Australian states of Victoria, New South Wales, and Western Australia, where Crown Resorts has operations.
In February last year, a casino licence was initially withheld from Crown Resorts by the New South Wales regulator following an inquiry into how the casino group ran its existing Australian business. The permit topic related to the firm’s new Crown Sydney venue in the Barangaroo district of Sydney.
But in December, in an investor presentation, Crown Resorts said it hoped to launch gaming operations at Crown Sydney in early 2022.
In October, a public inquiry in Victoria found Crown Resorts “unsuitable” as a gaming licensee in that state, but allowed the group to keep its licence, subject to stricter oversight.
Rival Australian casino firm The Star Entertainment Group Ltd proposed in May a merger between it and Crown Resorts, that valued the target’s shares at more than AUD14.00 apiece.
But in July – amid public inquiries into Crown Resorts’ respective Melbourne and Perth casino licences – the suitor withdrew its offer.
Star Entertainment last year faced regulatory headwinds of its own in Australia.
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