SYDNEY (REUTERS) - Crown Resorts backed an A$8.9 billion (S$8.5 billion) buyout from private equity giant Blackstone on Monday (Feb 14), giving billionaire James Packer an exit route from the Australian casino firm beset by scandals and regulatory setbacks.
Mr Packer will cash in his chips a decade and a half after he created Crown to shift away from the Packer family’s media empire in a bid to reinvent the dynasty as a gambling business.
The A$13.10 cash offer values the casino operator below its share price in 2019, before Covid-19 restrictions and damaging regulatory inquiries in the three states it operates, but Crown chief executive Steve McCann said it provides much-needed certainty for shareholders.
Crown shares rose 2 per cent to A$12.65 on Monday.
Blackstone, which already holds around 10 per cent of Crown, will take over a company facing regulator scrutiny after official investigations found it had knowingly dealt with criminal organisations then misled the authorities about it.
The gambling licence for Crown’s flagship A$2.2 billion casino skyscraper in Sydney remains suspended, more than a year after it was due to open. Crown’s main earner, its Melbourne casino, must operate with a government-appointed supervisor for two years.
Mr John Ayoub, a portfolio manager at Wilson Asset Management, which holds Crown shares, supported the decision to back the deal - Blackstone’s fourth attempt.
“In the light of what has transpired over the past few years, this is a good outcome for all parties involved,” he said.
As Crown’s biggest shareholder with 37 per cent of the company, Mr Packer’s vote will be pivotal to reach the 75 per cent shareholder approval threshold. A spokesman for Mr Packer, who would walk away with about A$3.3 billion, declined to comment.
End of an era
Mr Packer has been pulling back from corporate life for years and a decision to support the deal would effectively end one of Australia’s most storied business dynasties.
His journalist grandfather Frank Packer in 1936 started Australian Consolidated Press, a newspaper and magazine juggernaut that would dominate the country’s media landscape for more than half a century.
The outsize influence of the media empire was reinforced under the control of Mr Kerry Packer, the pioneer’s son and James’ father, until Kerry’s death in 2005.
Mr James Packer, however, took the family business in a new direction, splitting the parent company, Publishing and Broadcasting, into Consolidated Media Holdings to retain the traditional assets and Crown, which spearheaded his gambling industry ambitions. He promptly sold the media assets.
But Crown was in serious difficulty within a decade. As it pushed ahead with rapid expansion plans in Macau, Las Vegas and Australia, 19 of the company’s employees were jailed in China for breaking that country’s laws banning the marketing of gambling.
That prompted an abrupt retreat from all dealings abroad, while Mr Packer himself began to step away from corporate life, quitting the boards of Crown and his private investment vehicle, CPH Holdings.
The Blackstone deal still needs regulatory approval. A shareholder meeting to vote on it is expected in the June quarter.