James Packer is set to become $3.26bn richer after Crown Resorts accepted an offer to sell its entire Australian casino empire to a US private equity firm.
Blackstone last month finally secured the board’s support for its improved, fourth takeover offer of $13.10 per share, with the indicative bid now binding and unanimously backed by Crown’s top brass.
The $8.87bn sale remains subject to approval by shareholders, Australia's Foreign Investment Review Board and, importantly, gaming regulators in each state it operates.
There’s a strong chance they will view Blackstone’s experience in running casinos in the US favourably.
As for the reclusive billionaire, the takeover gives him an easy exit from the embattled company.
His hand is effectively forced, given last year’s Victorian royal commission recommended cutting his stake in Crown from 37 per cent to less than 5 per cent, which the state government accepted along with all other recommendations.
The NSW government also backed all suggestions stemming from its explosive 2020 inquiry, including limiting stakes in a casino licensee to 10 per cent unless approved by a new, powerful Independent Casino Commission.
Both recommendations came after Mr Packer’s influence on Crown was labelled “disastrous” by the NSW investigation, as he was the driving force to secure more of the Chinese high-roller junket tours at the centre of the gaming giant’s money laundering scandal.
Mr Packer has been steadily retreating from public corporate life, stepping down as Crown’s chairman in 2015, quitting the board in 2018 and then trying to sell a 19.9 per cent interest in the company to Hong Kong gambling giant Melco Resorts, an ill-fated transaction that only got halfway through when the NSW inquiry was launched.
A wildcard in the mix is other rival suitors turning the takeover into a bidding war, potentially providing a better deal for shareholders.
There are plenty to choose from: Brisbane-based Star Entertainment Group withdrew its merger bid for Crown last year after limited engagement with the target’s board.
Then there’s global private equity giant Oaktree, which last year offered to bankroll a $3bn buyback of Mr Packer’s stake.
However, Crown shares lifted as high as $12.76 in intraday trade – well short of the offer price and suggesting investors believe a better bid won’t lob in.
It’s been a torrid past few years for the company, which was forced to gut its board in a bid to redeem itself from the money laundering debacle and has been hit hard by Covid-related closures and restrictions.
But analysts say the jewel in Crown is its sizeable property portfolio comprising its flagship Melbourne casino, new $2.2bn development at Barangaroo in Sydney and a casino and resort in Perth.
Even with the company being denied a gambling licence for the epic new Sydney tower after the NSW regulator deemed Crown unfit to run a casino, it has been running restaurants and a flashy hotel and making big money from selling luxury apartments in the complex.
Crown also owns a small private gambling club in London’s affluent Mayfair district.
While Mr Packer will be decisive in the shareholder vote, the deal already has the backing of fund manager Perpetual, which owns 9 per cent of Crown.
“The announcement today represents a compelling offer for Crown’s shareholders to consider,” Crown chief executive Steve McCann said in a statement.
“The price appropriately reflects the value of Crown’s world-class assets and global reputation for premium service and experiences.”
The findings from Crown’s royal commission in Perth are due next month, following on from the Victorian royal commission – both sparked by the NSW inquiry – effectively putting the company’s Melbourne operation on probation for two years.
Crown says the Blackstone deal could be complete in the June quarter if approved by shareholders.
