Crown Resorts Shareholders Approve Blackstone Takeover Bid
Crown Resorts shareholders are in favor of handing over the Australian casino operator to private equity firm The Blackstone Group. They voted today on the $6.6-billion scheme, overwhelmingly supporting the move.
Shareholders were initially going to vote on the sale of the company last month; however, Crown pushed back the date. The Brisbane Times reports that the wait is over, with proxy votes pouring in to support the deal ahead of an investor’s meeting today.
The transaction received approval from 77.4% of the shareholders. In terms of the number of total held shares, 99.75% want the deal to move forward. Those were only the proxy votes, but they still account for 404 million of the 677 million issued shares. As such, the odds of the remaining shares opposing the deal are virtually nil.
Acquisition Faces More Hurdles
Just because the shareholders almost completely support the deal, this doesn’t mean that it will necessarily happen. The different Australian states where Crown has a presence have to give their approval, as well. This includes New South Wales, Victoria and Western Australia.
Each of those states has the right, and the obligation, to explore Blackstone’s operational integrity and its financial stability. The company already runs 174 casinos, many of which are in the Latin American market. It has to prove that it can abide by Australia’s gambling and financial regulations, something Crown couldn’t do.
The lack of those approvals is only a minor snag, according to Ziggy Switkowski, Crown’s latest chairman. He explained to shareholders that the board wanted to push forward with the vote in order to close the gap between the current step in the process and the finish line.
Crown doesn’t expect regulators to stand in the way. Having shareholder approval means the company will be that much closer to wrapping up the deal when those approvals arrive.
The license for Crown’s iconic $1.55-billion skyscraper in Sydney remains suspended more than a year after it opened. In addition, the company’s Melbourne casino continues to operate with a government-appointed supervisor since last year.
Packer the Big Winner
Should the deal advance, James Packer will ultimately be the big winner in the sale. Despite admissions of wrongdoing and failing to manage the company properly, the Crown founder and former CEO will receive a huge settlement when the transaction concludes.
Packer will net $2.3 billion as his 37% stake in the company ends. This is in addition to the payouts he received over the years as Crown’s dereliction of duty and irresponsible money-handling processes were revealed.
Should regulators reject the deal for any reason, Packer can still walk away with billions of dollars. Part of the arrangement, when Victoria put Crown on probation, included a requirement that Packer sell most of his stake. As a result, whether Crown buys the company or not, Packer will need to find a buyer for his portion.
The announcement of the voting results is already boosting Crown’s stock. On May 17, it was trading at AU$12.6 (US$8.94). It hit AU$12.82 (US$9.05) a share this morning before rising to AU$12.88 (US$9.10).
The stock price is down slightly now, however, trading at AU$12.84 (US$9.07) as of 4 PM local time. This is the highest it has been all year and is almost where it was a year ago.
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