Blackstone last week submitted an increased takeover proposal for Crown, offering AUS$12.35 in cash per Crown share, representing a 4% increase on its previous offer of $11.85 per share submitted in March.
Other terms of the original offer – including a clause whereby the deal would not go ahead if either of Crown’s existing licences were suspended, or its New South Wales licence were not granted – remained in place.
However, Crown’s board unanimously concluded that the latest proposal undervalued the business and would not be in the best interest of shareholders. The Crown board also raised concerns over the regulatory approval clause, saying there was “significant uncertainty” over the timing and outcome of these processes.
“As a result, the conditions of the revised proposal as currently understood present an unacceptable level of regulatory uncertainty for Crown shareholders,” Crown said.
In its analysis, the Crown board flagged a series of other concerns it had over the offer, including the timing of the acquisition proposal given the impact of the novel coronavirus (Covid-19) pandemic on its recent financial performance.
There were also concerns about how long the deal would take to go through, as well as the low takeover premium being offered and issues related to the reduction in Crown’s debt, which is expected to occur through receiving proceeds from the sale of Crown Sydney apartments.
“The board is committed to maximising value for all Crown shareholders and will carefully consider any acquisition proposal that is consistent with this objective,” Crown said.
Meanwhile, Crown provided an updated on a separate proposal put forward by rival land-based operator Star last week. Star proposed merging with Crown and creating a combined operation worth approximately Aus$12.00bn (£6.60bn/€7.68bn/US$9.32bn).
The non-binding proposal set out a share exchange ratio of 2.68 Star shares for each Crown share, valuing Crown shares at $14 each. Crown shareholders would also be offered a cash alternative of $12.50 per share, up to a maximum of 25% of Crown’s issued share capital.
The proposal would mean the merged entity would be 59% owned by Crown shareholders with the remaining 41% for Star shareholders.
Crown has now said that while it board has not yet formed a view on the “merits” of the proposal, it has requested further information from Star “to better understand various preliminary matters.”
Crown added that its shareholders do not need to take any action and that there is no certainty the proposal will result in a transaction.
The update on both offers comes after Crown last week announced that its Crown Resorts Melbourne division had been ordered to pay a total of $22.5m as part of measures set out by the New South Wales Independent Liquor and Gaming Authority (IGLA).
Crown must pay $12.5m towards the inquiry and also pay an annual Casino Supervisory Levy of $5.0m in both FY2021 and FY2022, after the regulator found Crown “unsuitable” to operate a casino in the Barangaroo district of Sydney in February. The operator may pay a further levy in FY2023, but this is “subject to further consultation”.
Other orders included equipping all its casino gaming with card technology and not accepting cash, as well as ceasing all international junket operations – something the operator said it has already done.