Crown Resorts Acquisition by Blackstone Receives Approval from Two Regulators
Posted on: June 9, 2022, 05:33h.
Last updated on: June 9, 2022, 01:18h.
Private equity firm The Blackstone Group is two steps closer to taking over Australia’s Crown Resorts, according to WA Today. The company has received two key approvals that will allow the deal to move forward.
Crown shareholders already signed off on the AU$8.9-billion (US$6.6 billion) arrangement. Now, New South Wales’s (NSW) Independent Liquor and Gaming Authority (ILGA) and the Victorian Gambling and Casino Control Commission (VGCCC) have given their approval as well.
Previously, NSW determined Crown’s management was “unsuitable” to operate a casino in the state. Now, both NSW and Victoria have determined that Blackstone is. Approval from regulators in Western Australia (WA), where Crown runs a casino in Perth, is still pending.
Blackstone Closer to Crown Takeover
Blackstone had to prove to regulators that it upholds the “highest standards of probity” to appease regulators. It also had to demonstrate a commitment to deliver all operational changes recommended by the Bergin Inquiry, which stripped Crown of its license.
This commitment is essential to ensure Crown Sydney is not influenced by criminals and that it manages potential harm from casino activities. The license for the Crown casino skyscraper worth AU$2.2 billion (US$1.58 billion) in Sydney, NSW, could soon be granted more than a year after the property’s grand opening.
The ILGA explained that probity checks on Blackstone took nearly 15 months. That’s dating from when the investment management company launched its first takeover offer last March. These checks covered Blackstone’s other casino company, Cirsa. They also included a detailed look at Blackstone’s key people.
We have found Blackstone is now suitable to hold a casino licence in NSW, and that is pretty much a key step for it to become the operator of Crown Sydney,” said Philip Crawford, chairman of the NSW Independent Liquor & Gaming Authority.
Crown’s casino in Melbourne has been operating with a government-appointed watchdog since last year and will continue to do so, the VGCCC said. The same situation applies in WA. Both Victoria and WA put Crown on probation for two years following their own inquiries.
A successful deal with the US private equity giant could give Crown founder, billionaire James Packer, a way out of the scandal-torn company amid regulatory setbacks. It would also allow him to receive a windfall for his poor management of the Crown. There’s a payout of around US$2.3 billion for his share of the company.
Welcome News for Shareholders
The company’s stock improved after Crown announced that it received regulatory approval to move forward with the Blackstone deal. Early-morning trading on the Australian Securities Exchange increased by 2%, reaching AU$12.99 (US$9.31).
It then climbed a little more before settling at its current price of AU$13.00 (US$9.31). That’s slightly higher than yesterday’s close of AU$12.75 (US$9.14). However, it’s much better than the AU$8.61 (US$6.17) from almost a year ago.
Even though Crown shareholders endorsed the takeover and regulators now appear to be on board, there’s more work to be done. Australia’s Federal Court must approve the acquisition but will not set a hearing date until Perth’s regulator greenlights Blackstone.
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