Troubled casino operator Crown Resorts gets white knight, share price jumps 18 per cent
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Troubled casino operator, Crown Resorts (ASX:CWN), has today received a non-binding offer from US-based investment manager, Blackstone.
The offer is for all of the Crown shares not already owned by Blackstone, for an indicative price of $11.85 a share.
The price is a 19 per cent premium to to the volume-weighted average price of Crown shares since the release of its 1H FY21 results on the 18 February 2021.
The announcement resulted in a boon for shareholders, with the Crown share price surging by 18 per cent to $11.62 at market open today, just shy of the offer price. The shares had closed at $9.86 on Friday.
Blackstone already owns 9.99 per cent of Crown, which it acquired from Melco Resorts at $8.15 in April last year. James Packer meanwhile, owns 36 per cent.
The proposal will be subject due diligence and a unanimous approval from Crown’s board. Importantly, it will be subject to a regulatory approval that a Blackstone-owned Crown is considered suitable to own and operate casino licences in various states.
The casino has been facing massive problems with the regulators in various states over its operating licence.
The troubles began as far back as 2016, when 19 Crown employees were arrested for gambling-related crimes in China. It was also in hot water over its association with junket operators, who were agents that attract Chinese high rollers to the casino. These junkets have been accused of having ties to organised crime, prostitution, and money laundering.
These accusations led to an inquiry by the New South Wales government, in what was known as the Bergin Inquiry. In a final report in February, the inquiry ruled that Crown is unfit to hold a gambling licence for its new $2.2 billion casino on Sydney Harbour.
The Bergin inquiry featured the infamous “blue cooler bag” CCTV footage, showing bundles of $50 notes being exchanged for gambling chips in a VIP gaming room, which confirmed that the practice of money laundering had existed.
The result of the that inquiry resulted in Victoria and Western Australia announcing they will also hold their own inquiries into Crown.
Despite all the negative news over the past year and disruptions due to lockdowns, the Crown share price has only lost 4 per cent since the beginning of 2020.