Crown spurns $6.5 billion Blackstone bid, seeks more information from Star – Metro US

Crown spurns $6.5 billion Blackstone bid, seeks more information from Star

FILE PHOTO: Crown Resorts Ltd’s flagship tower nears completion at
FILE PHOTO: Crown Resorts Ltd’s flagship tower nears completion at Barangaroo, Sydney

By Paulina Duran

SYDNEY (Reuters) -Australia’s troubled casino operator Crown Resorts on Monday rejected an all-cash $6.5 billion buyout proposal from Blackstone Group as too low, but said it was seeking more information from rival suitor Star Entertainment Group.

The rebuff comes as Crown, which has prized tourism and real estate assets in major Australian cities, faces intense regulatory scrutiny and is grappling with a slump in profits due to the coronavirus pandemic.

Crown said while it had considered a range of scenarios given regulatory enquiries, the U.S. private equity giant’s offer of A$12.35 per share or A$8.4 billion did not take into account the full value of its assets, a potential jump in earnings once the pandemic eases and plans to pay down a significant amount of debt.

Blackstone, which owns 10% of Crown, declined to comment. It has not had access to Crown’s books, said a person familiar with the matter who was not authorised to comment publicly and declined to be identified.

In contrast to Blackstone, Star has made an all-stock offer that it argues values Crown in excess of A$14 per Crown share or A$9 billion.

Crown said in a separate statement it had not yet formed a view on the merits of the Star merger proposal but had asked for certain information to better understand preliminary matters.

Its shares were up 0.8% on Monday at A$$13.15. Star’s shares also gained, climbing 1%.

Star’s proposal is expected to attract antitrust scrutiny since it would create a single gambling behemoth in Australia without a competitor.

Crown has also received a proposal by Oaktree Capital Group to bankroll a A$3 billion purchase of founder James Packer’s 37% stake to remove regulatory concerns.

Crown executives on Monday were facing their first day of six-week hearings at a government-mandated inquiry in Victoria to assess whether Crown is fit to keep its operating licence in the country’s second most populous state and the home of its largest operating casino.

That enquiry was called after Crown was found by a separate probe in Sydney to have enabled money laundering on its premises and knowingly dealt with tour operators linked to organised crime. That probe cited the influence of Packer over the Crown board as a governance problem.

Crown, which lost its CEO in the inquiry fallout, said this month it had appointed Steve McCann, the head of property developer Lendlease Group to the role.

($1 = 1.2853 Australian dollars)

(Reporting by Paulina Duran in Sydney; Additional reporting by Anushka Trivedi in Bengaluru; Editing by Edwina Gibbs)