It appears that The Blackstone Group is going to have to head back to the boardroom if it wants to make a play for Crown Resorts. After Star Entertainment Group stepped in with a proposal that would see Crown and Star merge, Blackstone tried to sweeten the pot, but it apparently isn’t enough. Crown’s board has rejected the offer, but is reportedly taking more interest in what Star has to say. Given the fact that Star is already active in Australia, a marriage between the two largest hospitality companies in the country would likely find an easier path to acceptance.
Blackstone Rejected, Star Accepted
According to Inside Asian Gaming, Crown’s board of directors have decided that Blackstone’s attempt at a purchase of the company’s assets isn’t sufficient, despite having bumped it up from $6.2 billion to $6.6 billion when Star stepped forward. The board politely told Blackstone thanks, but no thanks, saying, “The Board has unanimously concluded that the Revised Proposal undervalues Crown and is not in the best interests of Crown’s shareholders.” It added that the “conditions of the Revised Proposal as currently understood present an unacceptable level of regulatory uncertainty for Crown shareholders.”
With Star having entered the bidding war with a proposal worth $9.4 billion – almost $3 billion more than what Blackstone indicated it was prepared to pay – it’s not too surprising that Crown’s board would head in that direction. In addition, Star has suggested that Crown’s shareholders would retain control by holding 59% of the shares of the casino operator following the merger. Crown’s board hasn’t confirmed that it is definitely considering the offer; however, it has said that it has “requested Star to provide certain information to allow the Crown Board to better understand various preliminary matters.”
Blackstone Could Try Again
As things look right now, only Star and Oaktree Capital Management are in the running for Crown, even though there is still no guarantee that the embattled casino operator will be forced out. Crown is desperately trying to show regulators, as well as the general public, that it is fixing the litany of mistakes it has made over the years. It’s possible regulators might grant clemency, but almost definitely not without ordering some major changes at the company.
One of those changes is linked to James Packer, who founded the company and was previously its chairman before stepping down years ago. Oaktree has offered to buy out his stake and Crown is still considering it, although nothing definitive is in the works. Blackstone has shown itself to be willing to open the wallet when it really wants to make a purchase, and it’s possible that it might find a way to come back into the hunt now. Time is running out, though, as the results of hearings being conducted on Crown are expected to be concluded soon, and the company is undoubtedly anxiously waiting to find out the results.