Australia’s Crown Resorts backs Blackstone’s $6.3 billion takeover bid

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Packer will cash in his chips a decade and a half after creating Crown to move away from the Packer family’s media empire with the goal of reinventing Dynasty as a gaming company.

The A$13.10 cash offer values ​​Crown below its share price in 2019, before COVID-19 restrictions and damaging regulatory investigations in the three states where it operates, but chief executive Steve McCann said it provided much-needed certainty to shareholders.

Crown shares rose 2% to A$12.65 on Monday.

“When you’re looking at a change in control, it’s not today’s trading price and today’s earnings,” McCann told analysts on a call, responding to a question. whether the company’s decision took into account post-pandemic exchanges and intense regulatory scrutiny.

“It’s a much wider valuation. It’s a pretty fair price.”

Blackstone, which already owns about 10% of Crown, will take over a business that is under intense scrutiny by authorities after official investigations revealed it knowingly dealt with criminal organizations and then deceived authorities in doing so. topic.

The gaming license for Crown’s A$2.2 billion flagship casino skyscraper in Sydney remains suspended, more than a year after it opened. Crown’s mainstay, its Melbourne casino, is to operate with a government-appointed supervisor for two years.

“The move to a new ownership structure is an important first step in addressing the many regulatory issues that have been highlighted,” said Angus Gluskie, managing director of White Funds Management, which owns Crown shares.

John Ayoub, portfolio manager at Wilson Asset Management, which also owns Crown shares, backed the decision to back the deal – Blackstone’s fourth attempt.

“In light of what has happened over the past few years, this is a good result for all parties involved,” Ayoub said.

As Crown’s largest shareholder with 37% of the company, Packer’s vote will be instrumental in meeting the 75% shareholder approval threshold. A spokesperson for Packer, who would walk away with around A$3.3 billion, declined to comment.

Chris Tynan, senior managing director and head of real estate at Blackstone Australia, said in a statement that the company was “very pleased to have entered into a binding implementation agreement with Crown”.

End of an era

Packer has retired from corporate life for years and a decision to back the deal would effectively end one of Australia’s most storied business dynasties.

Packer’s journalist grandfather, Frank Packer, in 1936 started the Australian Consolidated Press, a juggernaut of newspapers and magazines that would dominate the country’s media landscape for more than half a century.

The outsized influence of the media empire grew under the control of Kerry Packer, son of Frank and father of James, until Kerry’s death in 2005.

James, however, took the family business in a new direction, splitting parent company Publishing and Broadcasting Ltd into Consolidated Media Holdings to retain traditional assets and Crown Ltd, which spearheaded his ambitions in the media industry. game. He quickly sold the media assets.

But Crown was in serious trouble within a decade. As it continued its plans for rapid expansion in Macau, Las Vegas and Australia, 19 company staff were jailed in China for violating that country’s laws banning the marketing of gambling.

This caused an abrupt withdrawal from all overseas dealings, while Packer himself began to drift away from corporate life, quitting the boards of Crown and his private investment vehicle. , CPH Holdings.

The Blackstone deal still needs regulatory approval. A meeting of shareholders to vote on this is scheduled for the June quarter.

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