Blackstone acquires James Packer’s Crown casino empire for $6.5 billion

Blackstone acquires James Packer's Crown casino empire for $6.5 billion Stephen Schwarzman, Blackstone Wikipedia
Blackstone acquires James Packer’s Crown casino empire. Stephen Schwarzman, Blackstone

Australia’s largest casino operator Crown Resorts has decided to enter into takeover negotiations with Blackstone after the US private equity firm increased its offer to approximately A$8.9bn (US$6.5 billion). Blackstone already owns 9.99 percent of Crown.

Crown’s shares increased by as much as 9% following the announcement.

casino operator Crown Resort is now valued at A$13.10 per share, a 5.7% premium to the stock’s last close, around A$1 billion in total, over Blackstone’s previous November offer to acquire the corporation backed by Australian billionaire James Packer.

Crown has been subjected to severe misbehavior investigations in every state in which it operates and has also been harmed by a COVID-19-related decline in visitor numbers.

Blackstone’s new offering came after several attempts to persuade the board of directors of the company to accept an offer.

Blackstone tried to acquire the entire firm last year after Australian regulators determined that Crown was unfit to run a new A$2.2 billion casino resort in Sydney due to money laundering issues and weak corporate governance.

This acquisition brings an end to a months-long story that saw Blackstone make three previous bids, Star Entertainment, a smaller casino rival that has pursued a merger, have been competing for Crown withdraw A$9 billion offer, and Oaktree Capital call off plans to acquire founder James Packer’s more than a third of Crown interest.

Star abandoned its interest in July when Australian officials suggested Crown’s gambling license could be revoked as a result of an investigation into money laundering allegations. This danger was withdrawn in September after the probe concluded and Star indicated an interest in renewing its A$12 billion merger plan.

Blackstone’s due diligence will be completed in the coming days.

“In the absence of a superior proposal, and subject to an Independent Expert concluding (and continuing to conclude) that the proposed transaction is in the best interests of Crown shareholders,” the company stated.

The transaction is Blackstone’s latest in the casino sector, following its agreement with MGM in 2019 to acquire the real estate assets of the Bellagio Hotel and Casino in Las Vegas for $4.25 billion.

Packer resigned from the company’s board of directors in 2018, claiming mental health difficulties. A government-commissioned probe has since concluded that he must cease “remotely manipulating” activities for the company’s best benefit.