A full-on bidding war for Australia’s famous Crown Resorts has recently begun between the American private equity investment firm Blackstone and the notable Australian casino organisation Star Entertainment Group. Blackstone has offered to buy Crown, while Star has proposed a merger.
Crown Resorts said it would consider both offers but has now stated that the all-cash $6.5 billion buyout offer from Blackstone is too low. At the same time, the company said it wants more information on the Star merger offer.
Numerous prized real estate and tourism assets are under the Crown Resorts brand. It owns several locations in major Australian cities. Even though it faces several regulatory hurdles, the company feels its assets are more valuable than what the Blackstone acquisition offer covers.
The company feels that Blackstone didn’t take into consideration the total value of Crown’s assets, especially when potential future earnings are considered. Crown believes its earnings are bound to increase significantly when the pandemic subsides. It also plans to pay a big portion of the debt it has.
As for Blackstone, the private equity firm that already owns 10% of Crown, has decided not to comment on Crowns views. However, a person from Blackstone, who is sufficiently familiar with the matter, has stated that they are not allowed to make a public comment at the moment and that Blackstone hasn’t had access to Crown’s books. They also refused to be identified.
What About Star?
On the other end of the bidding war is Star. This company has made an all-stock offer instead of the all-cash offer Blackstone made. It has valued Crown at $9 billion or $14 per share. By contrast, Blackstone’s offer is comparable to $12.35 per share.
Crown’s shares just rose by 0.8% and are currently sitting at $13.15.
Crown hasn’t yet made a decision or a view on this offer, releasing this statement simultaneously as the one for Blackstone. It’s also asking Star for more information to do preliminary research on the offer. This effectively means that it’s still too early to say that Crown is closer to accepting one side over the other.
It’s also worth mentioning that the Star and Crown merger could bring more scrutiny from the Australian government. This merger would create a single massive gambling operation bigger than any other in the country. It would give the new company somewhat of a monopoly, as it wouldn’t have a notable competitor on the Australian market.
As for Crown’s regulatory issues, the company has stated it will move towards a cashless system to deal with money laundering. At the same time, it will also end its connections to big-money casino junket operators.