Blackstone sees probity nod for Crown by Q3

crown melbourne

U.S. private equity firm Blackstone has provided more details on its bid for Australian operator Crown Resorts, saying it expects to clear the country’s notoriously tough probity checks by the third quarter of this year.

The expected timetable was disclosed in a letter to the company detailing modifications to some of the onerous regulatory conditions attached to its offer. 

The firm is seeking to buy Crown for A$11.85 a share, valuing the company at about $8 billion, which most analysts have said is likely to be too low to gain approval of Crown’s board.

Blackstone stipulates that it must receive approval for its bid from each of the three states in which Crown operates. That’s Western Australia, Victoria and New South Wales.

It said it’s also contingent on the group retaining its suitability to hold a license in each, without new regulatory conditions that could have a material adverse impact on the financial situation of the group.

Crown is under investigation by a Royal Commission in Western Australia and Victoria and regulators in New South Wales have already found it unsuitable to hold a license in Sydney for its newly opened property in Barangaroo.

The company is now undertaking a revamp of its due diligence and compliance procedures as well as making sweeping changes to its board and management in an attempt to regain suitability.

Much of the success of Blackstone’s bid will hinge on winning the backing of billionaire James Packer, the company’s largest shareholder at 37 percent. 

He recently said he had hired investment bank Moelis to advise on his options, which triggered speculation that he may be shopping around for better offers. The bank’s founder, Ken Moelis, advised on a failed bid by Wynn Resorts for Crown and is seen as a dealmaker in the industry in the U.S.