James Packer’s Crown Resorts has rejected Blackstone Group’s A$8.4 billion ($6.5 billion) offer to acquire the Australian casino giant, while considering the merger proposal made by Star Entertainment Group last week.
Star’s merger proposal came hours after Blackstone raised its takeover offer to A$12.35 per share from A$11.35 each. “The board has unanimously concluded that the revised proposal undervalues Crown and is not in the best interests of Crown’s shareholders,” Crown said in a statement to the Australian bourse.
While Crown said its board has not yet formed a view on the merits of Star’s competing bid, the company had asked Star to provide certain information that will help the board assess the offer. “Crown shareholders do not need to take any action in relation to the merger proposal at this stage,” it said in a separate statement. “There is no certainty that the merger proposal will result in a transaction.”
Star proposed on May 10 an all-share merger that would create a A$12 billion gaming giant down under. It offered 2.68 shares for each Crown share, implying a potential value of over A$14 per share. The offer, which values Crown at A$9.5 billion, comes with a cash option of A$12.50 a share, subject to a maximum of 25% of Crown’s total shares on issue. In rejecting Blackstone’s proposal, Crown said “the board considered a range of scenarios given the regulatory inquiries in relation to Crown which are underway.”
In February, regulators suspended Crown’s gaming license in Sydney and probes are ongoing as to whether the company is suitable to operate its casinos in Melbourne and Perth. The company said last week it is in discussions with regulators towards the introduction of cashless gaming alternatives at the Sydney casino, where it has already spent more than A$2 billion.
In announcing its bid last week, Star highlighted its strong relationships with regulators and proven track record of governance and compliance. This “should result in reduced regulatory approval risk” for the merged entity, John O’Neill, chairman of Star, said in a statement.
While Crown continues to cooperate fully with regulators, the company said its “board is committed to maximizing value for all Crown shareholders and will carefully consider any acquisition proposal that is consistent with this objective.”
Packer is the largest shareholder of Crown, which owns casinos in Australia and London, after taking over the empire of his late father, Kerry. He stepped down from the company’s board in March 2018 and resigned from the board of his family’s holding company Consolidated Press four months later.
Business News Governmental News Finance News
Need Your Help Today. Your $1 can change life.