Crown Resorts has two offers on the table for its casino business in Australia. The seekers are The Star Entertainment Group and Blackstone Group.
Blackstone, the private equity business of billionaire Stephen Schwarzman, has been targeting Crown since March. Blackstone is looking to expand its global footprint in the gaming industry. The group currently owns the physical assets of several Las Vegas Strip properties, including the Bellagio, Cosmopolitan, Mandalay Bay, and MGM Grand.
Blackstone initially offered Crown approximately A$7.88 billion ($6.2 billion) in cash for its integrated casino resorts in Perth, Melbourne, and Sydney. But Star Entertainment, another licensed commercial gaming operator Down Under, is entering the bidding war with a higher offer of roughly A$9 billion ($7 billion) in a shares and cash option.
Blackstone has subsequently upped its ante by nearly five percent, the new terms valuing Crown at $6.5 billion. Blackstone is currently the second-largest shareholder in Crown, with a 10 percent position. Only embattled founder James Packer controls more at 37 percent.
Star Hopes to Align with Rival
Crown Resorts and Star Entertainment have long been rivals in the Australian gaming industry. The two companies own and operate the largest casino resorts there.
Star, the smaller of the two, is looking to merge with Crown following the latter company’s recent regulatory difficulties. Crown opened its $1.7 billion Crown Sydney late last year. But an investigation conducted by the New South Wales Independent Liquor and Gaming Authority concluded that the company is not suitable to hold a gaming license. That’s because of its alleged links to organized crime and shortcomings in preventing money laundering.
In its pitch to Crown shareholders, Star says a merger would “create a national tourism and entertainment leader.”
With a portfolio of world-class properties across four States in Australia’s most attractive and populated catchment areas and tourism hubs, the combined group would be a compelling investment proposition and one of the largest and most attractive integrated resort operators in the Asia Pacific region,” said Star Chairman John O’Neill.
Star believes aligning the two casino operators would deliver upwards of $150 million annually in cost-saving synergies.
Crown Names New CEO
Crown is amid a series of corporate changes in the wake of the NSW probe.
The company has pledged to stop working with unlicensed junket promoters that have long transported foreign high rollers to its casino resorts. Crown has also overhauled its governance from its boardroom down.
Ken Barton resigned as CEO in February following the NSW damning report that found him to be “no match for what is needed at the helm of a casino licensee.”
Today, Crown announced his successor — Steve McCann. A Crown release says McCann has a 25-year executive career, and comes from Lendlease Corporation, where he’s served in an executive capacity since 2005. McCann has been the CEO of Lendlease, a globally integrated real estate and investment firm, for the past 13 years.
“Steve is a first-class appointment for Crown and the right person to embed the ongoing reforms necessary to restore regulatory and public confidence in our operations,” said Helen Coonan, executive chair of the Crown board. “Recognized as one of Australia’s most respected business leaders, Steve has a unique blend of strategic, financial and corporate governance expertise, and a track record of building strong employee engagement and driving cultural change.”
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