Crown Resorts shareholders expected to vote on the casino operator’s acquisition by The Blackstone Group this Friday. The vote will have to wait, as the private equity firm still doesn’t have all the Australian permissions it needs.
Everything seemed to be progressing smoothly for Blackstone to complete its planned acquisition of Australian casino operator Crown Resorts. The $6.6-billion deal easily slipped through the Foreign Investment Review Board’s (FIRB) scrutiny at the end of March. Crown shareholders still have to sign off on the acquisition, with a vote on the calendar for this Friday. However, that’s not going to happen.
In between the review by the FIRB and the vote is a series of approvals at the state level where Crown operates. The company stated yesterday in a filing with the Australian Securities Exchange that those approvals are still pending. As a result, the shareholder vote will have to wait. If no new obstacles pop up, the vote will take place on May 20.
Lofty Acquisition Goals
The timeframe for the acquisition always seemed overly aggressive to some analysts. There are a lot of moving parts and Crown’s current status in the country is more than a little strained. State regulators want to make sure that Blackstone is capable of leading the company in a new direction, although its plans are still unclear.
Blackstone is currently working with state officials to secure the necessary approvals. This means getting the green light in New South Wales (NSW), Victoria, Western Australia and the Northern Territory. Crown has casinos in the first three, while it operates an online betting platform, BetFair, in the fourth.
There is little reason to think that the company won’t be able to proceed, and NSW’s Independent Liquor & Gaming Authority hinted that it wouldn’t stand in the way in February. The other states, however, aren’t saying much at all.
Blackstone already holds 9.99% of the company, the result of a failed deal Crown had with Melco Resorts and Entertainment. Questions regarding the relationship between Crown and Melco forced the latter to sell its stake, and Blackstone swooped in.
Shareholders Likely to Support Sale
The consensus among industry analysts is that Crown shareholders will support the acquisition. The current stock price is AU$12.85 (US$9.15), and Blackstone is offering a purchase price of AU$13.10 (US$9.33) per share.
Despite his former antics at the company, Crown founder and former CEO James Packer will still reap huge rewards through the sale. He may have been forced out, but he still holds around 36% of the company. As such, his input on the vote is crucial.
Should shareholders vote on May 20 and approve the deal, Blackstone could wrap it up soon after. It is confident the final arrangement can enter the last lap on June 2.
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