Blackstone Safeguards Crown Proposal, Tightens Conditions

Australian casino operator Crown Resorts announced conditions for the proposed buyout of outstanding shares by Blackstone Group have been modified to include safeguard against possible loss of operating licenses before the deal is complete.

Regulatory Approval Condition

Last month, the private equity giant which already holds a 9.99% stake at Crown Resorts acquired from Melco Resorts tested the waters with an offer of AU11.85 per outstanding share of capital valuing the troubled casino operator at AU$8 billion, and stirring investor interest in Crown’s stock. Now, the New York-based equity fund added further conditions.

As part of the conditions for the deal to complete, a Regulatory Approval Condition seeks to ensure that in case Blackstone acquires Crown Resorts, the former would be a suitable entity to operate Crown’s gaming facilities in Perth, Sydney, and Melbourne.

Any changes to the Regulatory Approval Condition would require Blackstone to receive approval from each regulator in New South Wales (NSW), Western Australia (WA), and Victoria if the acquisition of 100% interest in Crown Resorts is to materialize.

Loss of License Leads to Deal Termination

According to the latest amendment, if the operator’s casino license in either Victoria or WA is canceled, suspended, or surrendered, the deal would fall through. There would be no deal either if Crown is not granted casino licenses in NSW.

Following the NSW inquiry into Crown’s suitability to hold a license for its newly-built casino resort near Sydney which ended with a suspension of the operator’s permit, the casino company is now facing similar inquiries in the other two states in which it operates, WA and Victoria.

The latest modifications of the conditions for the share buyout deal aim to ensure Blackstone is protected against any adverse recommendation from the upcoming public inquiries before the capital acquisition deal is approved by courts.

Crown’s statement outlined Blackstone’s expectation to receive all regulatory approvals and close the deal by the third quarter of 2021. On the other hand, public inquiries in Victoria and WA are expected to deliver recommendations in August and November, respectively, and any amendments made to Crown’s licenses that “constitute a material adverse change” will also be enough for Blackstone to rescind its offer.

Crown further noted that the bid currently under assessment from its board of directors was not conditional on the ability of its second-largest shareholder to arrange financing for it as was previously announced.

Earlier this month, Crown Resorts’ founder and largest shareholder James Packer who would receive for his nearly 37% stake AU$2.9 billion in case the deal goes through, said the proposal would be of interest for him.