Rumours Rife That Blackstone Will Purchase Crown Resorts
The Blackstone Group is one of the largest investment companies in the world and s set to purchase Crown Resorts if rumours in the city are true.
Blackstone acquired a 10% holding in Crown Resorts in March 2020. It couldn’t help itself after being offered 67,675,000 shares at a very tempting price. Blackstone paid $8.15 per share for assets Melco Resorts forked out $13 a share only months earlier.
Melco planned to purchase a 19.9% stake in Crown Resorts, doing so from majority shareholder James Packer. Lawrence Ho, the Melco CEO, agreed to pay $1.76 billion to Packer. Half the deal went through before they pulled the plug on the second $880 instalment. The parties involved blamed the COVID-19 pandemic that was in full swing. The fact the NSW Independent Liquor & Gaming Authority started an investigation into the deal didn’t help.
Ho sold his Crown Resorts shares to Blackstone at a staggering loss. The $8.15 Blackstone paid translates as a $330 million loss for Melco’s Ho.
Melco is bleeding cash thanks to coronavirus-related restrictions and a massive reduction in customers at its hotels and casinos.
This Is The Perfect Time For a Blackstone Takeover
Crown’s previously good name is no more. They have the aforementioned inquiry to thank for that. Australia’s biggest casino operator has not come out of the line of fire in a good light. The complete opposite is true, in fact.
The inquiry heard Crown is unsuitable for a casino licence in Sydney, which is bad news considering they’re yet to open their new $2.2 billion property in Barangaroo. This has led to campaigners asking whether or Crown should be able to operate at all.
It is likely Crown needs to make wholesale changes to its senior management team if it is to survive. Two senior directors resigned after Crown’s recent AGM.
John Alexander and independent director professor John Horvath walked the proverbial plank. Two other directors’ jobs were on the line but Packer’s huge influence in the voting process saved their skins.
Packer has wanted out of Crown for several years. He’s suffered from mental health issues and has made no secret he wants to leave Crown. The inquiry may force Packer out after it heard Packer’s influence is harmful to Crown.
This is the perfect time for Blackstone to strike. Not only are shares in Crown an attractive price ($9.13), but Packer wants a way out and the regulators want major changes to those running the company.
Blackstone applied to the NSW gaming regulator for the right to increase it’s holding in Crown Resorts. They applied in early October but there is no news yet. It is unlikely they will turn Blackstone down in light of current events.
Who Is This massive Investment Company?
Blackstone is an American private equity alternative investment management firm. It is the largest company of its kind. Peter Peterson and Stephen Schwarzmann founded Blackstone 35-years-ago in 1985. It now makes astronomical sums of money.
The sheer value of the company’s investments are mind-boggling.
- Private Equity – $259.3 Billion
- Hedge Fund Solutions – $107 Billion
- Credit and Insurance – $197.58 Billion
- Combined – $563.88 Billion
It can easily afford the $6.47 billion market price for Crown Resorts, although that bid wouldn’t be accepted. Blackstone are certainly lurking in the shadows, waiting for regulatory news before striking.
They know Crown not receiving a Sydney gaming license would be extremely damaging for Crown. It would wipe out hundreds of millions of dollars of value overnight. Likewise, suspending any of Crown’s other licences would spell disaster for Crown. Not for Blackstone, they would sweep in for a cut-price deal and get their hands on a major asset. Casinos are essentially licences to print money. Blackstone knows this and it won’t be surprising when they finally swoop in.