James Packer considers selling Crown.
Wealthy Australian entrepreneur James Packer (53) shows a willingness to sell Crown Resorts, but wants to determine the purchase price himself. US-based investment firm Blackstone proposed a 6.1 billion USD purchase for the takeover. Currently, Crown Resorts is grappling with a money laundering scandal and the departure of CEO Ken Barton. What future developments can we anticipate?
Evaluation of the Transaction Underway
Since March, Blackstone has expressed an interest in acquiring Crown, with an offer valued at 6.1 billion USD. Packer, who owns 37% of the Australian gaming market titan, has notified he's open to selling but intends to settle on the purchase price by himself.
The Crown Resorts Ltd.'s board handles the final decision on the sale. Packer's private firm, Consolidated Press Holdings (CPH), has aligned with an investment banker from Moelis Australia to evaluate the possible transaction. The company intends to engage with all interested parties, including regulators, regarding the proposal. Notably, Blackstone - based in New York - presently holds a 10% stake in Crown. Blackstone proposed a price of nearly $9.2 per share on March 21, which values Packer's shares at approximately $2.3 billion.
The legality of the offer is currently being scrutinized, as Blackstone purchased its erstwhile 10% shareholding from Melco Resorts & Entertainment Limited. This ownership was acquired through a questionable stock agreement in June 2019 between Packer and Melco creator Lawrence Ho. The latter's father, Stanley Ho, is said to have worked with organized crime syndicates in China. This alliance contributed to Crown's third revoked permit, as the terms stipulated that Crown should not conduct business with anyone associated with Melco.
Packer's Urge for Reduction
CPH states that Packer has for some time desired to reduce his share in Crown - which is a significant portion of his vast assets - and ultimately extricate himself. It's somewhat surprising that CPH has decided to have the potential deal with Blackstone mentally assessed, considering Packer had announced last month he'd adhere to the Crown board's verdict regarding his stake disposition.
Several factors might compel speculation: whether Packer will now negotiate individually with Blackstone, if he'll leave the conversation to the new CEO Helen Coonan, and whether Packer will have influence in decision-making. The responsible supervisory authority ILGA (Independent Liquor & Gaming Authority) has recently pressured Packer to remain away from board decisions.
The fact that Packer holds the right to decide on the offer hints that he wants to maintain control over any deal. He could potentially scupper any arrangements he deems inadequate. Analysts have judged Blackstone's offer to be too low, prompting a surge in share prices beyond the offer value.
Crown Resorts in a Perilous Position
An ILGA investigation uncovered proof of money laundering at Crown, leading to the resignation of CEO Ken Barton in late February. Subsidiary and Melbourne and Perth casino accounts were involved in criminal activities. For Crown to be classified as a fitting licensee, ILGA demands a revamp of management.
The allegations against Crown Resorts are severe: they embody insufficient scrutiny of business partners. Specifically, cooperation with Chinese Junket Operators agencies linked with criminal organizations is suspected. In its final report, the ILGA criticized Crown for overconfidence, entrepreneurial arrogance, and negligent due diligence.
Junket operators engage in recruiting super-wealthy patrons and facilitating their gambling trips. While lawful in Australia, they may not solicit clients from nations where gambling is forbidden, such as China. It is alleged that Crown consorted with junket operators despite knowledge of their ties to criminal elements since 2014. Consequently, Australia is contemplating a ban on junket partners.
While Coonan is now managing director, she's under immense pressure. She's intent on meeting the ILGA's demands for a management and leadership culture overhaul. The board maintains its commitment to fully cooperating with all ILGA investigations.
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Source: www.onlinecasinosdeutschland.com
