James Packer set to pocket $3.2 billion from Crown sale

Reclusive billionaire James Packer now has an easy way out of Crown Resorts and will be $3.2 billion rich if a takeover bid succeeds.

James Packer is set to get $3.26 billion richer after Crown Resorts accepted an offer to sell its entire Australian casino empire to a US private equity firm.

Last month, Blackstone finally won board support for its fourth enhanced tender offer of $13.10 per share, with the indicative offer now binding and unanimously backed by senior executives. Crown.

The $8.87 billion sale remains subject to approval by shareholders, Australia’s Foreign Investment Review Board and, crucially, gaming regulators in each state where it operates.

Chances are they will look favorably on Blackstone’s experience in running casinos in the United States.

As for the reclusive billionaire, the takeover gives him an easy exit from the beleaguered company.

His hand is effectively forced, given that the Victorian royal commission last year recommended reducing his stake in Crown from 37% to less than 5%, which the state government accepted along with all other recommendations. .

The New South Wales government has also backed all suggestions stemming from its explosive 2020 investigation, including limiting stakes in a casino licensee to 10% unless approved by a powerful new independent casino commission. .

The two recommendations came after Mr Packer’s influence over Crown was described as ‘disastrous’ by the NSW inquiry, as he was the driving force behind securing more Chinese high-roller tours at the center of the money laundering scandal money from the gambling giant.

Mr Packer gradually withdrew from public company life, stepping down as chairman of Crown in 2015, quitting the board in 2018 and then trying to sell a 19.9% ​​stake in the company to Hong Kong gambling giant Melco Resorts, an unfortunate transaction. this was only done halfway when the NSW inquiry was launched.

A wildcard in the mix is ​​other rival suitors turning the takeover into a bidding war, potentially offering shareholders a better deal.

There’s plenty to choose from: Brisbane-based Star Entertainment Group withdrew its merger offer for Crown last year after limited engagement with Target’s board.

Then there’s global private equity giant Oaktree, which last year offered to fund a $3 billion buyout of Mr Packer’s stake.

However, Crown shares hit $12.76 in intraday trading – well below the bid price and suggesting to investors that a better offer won’t come along.

The past few years have been torrid for the company, which has been forced to gut its board in a bid to redeem itself from the money laundering debacle and has been hit hard by Covid-related shutdowns and restrictions .

But analysts say Crown’s crown jewel is its sizable property portfolio comprising its flagship Melbourne casino, a new $2.2 billion development at Sydney’s Barangaroo and a casino and resort in Perth.

Even though the company was denied a gambling license for Sydney’s epic new tower after the NSW regulator deemed Crown unsuitable to run a casino, it runs restaurants and a flashy hotel and makes big money selling luxury apartments in the complex.

Crown also owns a small private gambling club in London’s affluent Mayfair.

While Mr Packer will be decisive in the shareholder vote, the deal already has backing from fund manager Perpetual, which owns 9% of Crown.

“Today’s announcement represents a compelling offer for Crown shareholders to consider,” Crown Chief Executive Steve McCann said in a statement.

“The award appropriately reflects the value of Crown’s world-class assets and its global reputation for premium service and experiences.”

Findings from Crown’s Perth royal commission are due next month, following the Victorian royal commission – both triggered by the NSW inquiry – effectively putting the company’s Melbourne operations on probation for two years.

Crown says the Blackstone deal could be finalized in the June quarter if approved by shareholders.

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