Blackstone Wins Australia’s Crown Resorts in $6.3B Buyout Deal

Blackstone has reached a deal with Australia’s Crown Resorts in which the US private equity titan would acquire all the listed shares of the casino operator for A$8.9 billion ($6.3 billion).

The all-cash consideration of A$13.10 per share represents an increase in equity value of more than A$845 million on the price of A$11.85 per share initially offered by Blackstone last March, Crown said Monday in a filing with the Australian Securities Exchange.

The proposed transaction — which faces regulatory hurdles and is contingent on no better offer emerging — marks the exit of billionaire James Packer, who owns a 37 percent stake in Crown after selling half his interest to a son of the late Macau gaming tycoon Stanley Ho in 2019. Blackstone already holds a 10 percent share of the gaming giant, which has been rocked by allegations of money laundering and other wrongdoing.

“The Crown board and management have made good progress in addressing a number of significant challenges and issues emerging from the COVID-19 pandemic and various regulatory processes,” said Crown chairman Ziggy Switkowski. “Nevertheless, uncertainty remains and having regard to those circumstances and the underlying value of Crown we believe the Blackstone transaction represents an attractive outcome for shareholders. The all-cash offer provides shareholders with certainty of value.”

Upping the Ante

Last May, Melbourne-based Crown received a revised proposal from Blackstone of A$12.35 in cash per share, which was rejected by the Crown board. That same month a competing cash-and-stock offer emerged from Australia’s Star Entertainment Group valuing the Crown shares at A$14 each.

In November, a A$12.50 cash offer by Blackstone was judged as not representing compelling value for Crown shareholders, though the gaming group did grant the Manhattan-based firm access to non-public information for due diligence purposes.

In January, Crown announced that it had received a further revised proposal from Blackstone for $13.10 a share in cash. This week, Crown managing director and chief executive Steve McCann termed the deal “a compelling offer” for Crown’s shareholders to consider.

“The price appropriately reflects the value of Crown’s world-class assets and global reputation for premium service and experiences,” McCann said. “The agreement with Blackstone also highlights the strength of the Crown brand and confidence in our future as we emerge from some challenging times, which is welcome news for our people, customers and stakeholders.”

Hurdles to Surmount

The transaction remains subject to various conditions, including a stamp of approval from Aussie regulators and an independent expert.

The agreement includes a breakup fee of A$89 million, about 1 percent of equity value, payable to Blackstone in the event that Crown backs out of the deal, as well as a “reverse breakup fee” payable to Crown in the same amount if Blackstone fails to meet certain terms.

The year 2021 found Blackstone busy Down Under, including with deals like the $2.9 billion April sale of the Milestone logistics portfolio to a joint venture of Singaporean sovereign fund GIC and Hong Kong-listed industrial specialist ESR.

In November, the firm founded by billionaire chairman Stephen Schwarzman stepped in to buy a 50 percent stake in Sydney’s Grosvenor Place office tower for A$925 million ($674 million) after China Investment Corporation backed out of the acquisition.

In December, Blackstone agreed to acquire a 49 percent stake in Dexus Australia Logistics Trust from GIC, with the private vehicle reported to be worth A$3.5 billion ($2.5 billion).