Blackstone completes acquisition of Crown Resorts

Not so long ago, Crown Resort, Australia’s largest gambling operator, decided to be taken over by US private equity firm Blackstone. Crown Resorts’ board voted unanimously on the A$8.9 billion offer. For more than two decades, Crown Resort, which operates Crown Melbourne and Crown Perth casinos, was owned by James Parker, who took over the business from his father. In the past, Blackstone has reportedly made a few offers which have been turned down, and other companies have also tried to buy Crown Resort. However, Crown’s board of directors announced that the 8.9 billion Australian dollars was the right offer to accept.

Private equity firm Blackstone

The company was founded in 1985 and was initially a mergers and acquisitions company. Today, Blackstone is a Type C corporation headquartered in New York.

The company made some of the biggest leveraged buyouts in 2006/7, and some of them include TDC, EQ Office, Travelport, Freescale Semiconductor, United Biscuits, Biomet, etc. They are constantly in the market today, trying to find potential investments.

Previous offers for Crown Resort

Crown Resort is one of Blackstone’s most recent acquisitions, which will make them majority shareholders. Before anyone mentioned the takeover, Blackstone already had a 10% stake in Crown Resort. Because of their involvement with Crown Resort, Blackstone knew how the resort operated, including the potential it held.

This is why Blackstone had already made an offer to take over Crown Resort in 2021, with a deal of around AU$12.50 per share. However, at the time, the board and James Packer were unhappy with the offer, so they turned down the proposal.

After the first bid, many other companies attempted to strike a deal with Crown Resort, and for Blackstone, there was a grueling 12 months during which they had to outbid their competitors.

To resume

Fast forward to 2022, Blackstone decided to make a final offer to the board of Crown Resort and James Packer, so they offered a 4.8% improved offer of A$13.10 per share or 8, A$9 billion in total. After various meetings and reviewing other offers from other companies around the world, the board decided that Blackstone’s new offer was fair and it was time to accept the proposal.

Consolidated Press Holdings, owned by James Packer, has a 36.8% stake in the company. So far, Packer has said nothing publicly about the takeover. However, with his holdings in Crown Resort, he will walk away with around A$3.2 billion. With this offer accepted, Packer’s family ties to the Crown Resort will end.

James Packer previously mentioned that he wanted the Crown Resort brand to go global and have locations in Macau and the United States. Although it can no longer achieve this, Blackstone can undoubtedly expand the brand and make it more successful worldwide.

Recent Crown Resort Issues and Investigations

A few years ago, Crown Resort came under investigation for money laundering, allowing junkets and facilitating criminal activity. Initially, they received a 2 year suspension from their gaming authority. However, after working closely with the Australian government and other regulators, Crown Resort was allowed to reopen their casinos conditionally.

From 18 months to 2 years, Crown Resorts management will work closely with independent casino commissions and other officials, overseeing casino operations. The station implemented a new business model, various anti-money laundering measures and changes in corporate culture.

Blackstone will continue to work with the Australian Government and the Casino Commission to ensure that any new changes are implemented and operate in accordance with applicable gambling laws. Many changes will be made to casinos now with Blackstone on board, and hopefully we won’t see similar issues happening again.

Of course, other minor changes will also come with the new owner. Nevertheless, Australians and other visitors to the Crown Resort can still enjoy the full gaming experience and expect nothing but fun.

Final Thoughts

Blackstone was a 10% shareholder even before acquiring Crown Resort, which means they know how the establishment operates. The American company will ensure that all legal reforms are implemented and will continue to work with officials in the country. With this takeover, Blackstone will become the main shareholder and will try to improve the giant that Crown Resort has been over the years. It will take time to get things back on track, but Blackstone representatives are optimistic and ready to start working.

This article is brought to you By Ryan White

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