Blackstone’s Bids to Purchase Australian Crown Centers

Crown said their board has not yet decided whether to withdraw the agreement and will begin evaluating Blackstone ‘s offer. Blackstone, which already owns nearly 10% in the Crown, confirmed that it had submitted the proposal. Blackstone already has real estate assets in Australia and footprint to play in other countries, including a Cosmopolitan casino and a resort town in Las Vegas.

The offer comes at a critical time for the Crown. Last month, a study by the gambling regulator in the state of New South Wales concluded that the Crown is not fit to operate a new casino on the Sydney coast.

The Crown has spent approximately $ 1.6 billion on the new specialty building that includes hotel rooms and accommodation as well as the VIP-only casino. Officials in the states of Victoria and Western Australia, where the Crown also operates casinos, have opened their own investigation into whether the Crown is still fit for casinos to operate there.

The 751-page report from New South Wales, based on 60 days of public hearings involving Crown executives, found that the Crown was circumventing the welfare of its workers in China by ‘following profit regulators’ – which culminated in the arrest of Crown workers in China for gambling-related offenses.

Bank accounts at Crown subsidiaries were used to launch money, and the Crown worked inappropriately with junket operators in Asia to bring gamblers to Australia, the report also found . The regulator began looking into the Crown after coverage of the questionable affairs in the local media.

The Crown has previously taken steps to address some of the issues raised by the New South Wales report, such as the cessation of all links with junkets and the creation of a compliance and financial offenses department. The report said the Crown could implement specific changes to improve suitability, and the Crown has said it is in talks with the regulator on the issue.

Blackstone’s bid allows key Crown shareholder James Packer, an Australian billionaire, to leave the industry amid regulatory uncertainty. The New South Wales report criticized Mr Packer, who previously sat on the Crown board but no longer does so, for controlling the company too much. Following the report, some Crown board members dropped links with Mr Packer.

Mr Packer controls a 37% stake in the Crown through his investment firm Consolidated Press Holdings. A CPH spokesman declined to comment on Blackstone’s offer.

In addition to the regulatory issues, the Crown industry has been hit hard by the coronavirus pandemic. International travel restrictions have delayed the flow of high rollers into their Australian casinos from overseas, and they have been asked to close their casinos at various locations due to local locks. The company said revenue fell 62% in the six months to December, and accounted for a loss in the half of about $ 93 million.

Crown, which operates a private games club in London as well as the Australian casinos, had a broader international footprint and was looking to expand again. But he withdrew from his global secrets after his employees were arrested in China in late 2016, and they sold a stake in Macau casino operator and pulled out of the Las Vegas casino project.

U.S. companies have previously expressed interest in the Crown. In 2019, Wynn Resorts Limited.

, they made an indicative takeover offer that then valued the Crown at $ 7.1 billion, but Wynn suspended the talks after he said the Crown had announced their talks prematurely.

Write to Mike Cherney at [email protected]