Blackstone Group Inc and Star Entertainment Group Ltd are the two giants involved in a bidding war to purchase the Crown Casinos in Australia. Oaktree Capital Management has also expressed interest in acquiring the Crown holdings. Recently, the Blackstone Group has made its third bid to purchase Crown. The new $6.2 bid is a sweetened version of its previous attempts to buy the establishment that is currently undergoing a series of misconduct inquiries, including anti-money laundering and governance compliance in Western Australia.
What Triggered the Bidding War?
The clash of the titans for Crown was initiated when an incriminating inquiry at the beginning of 2021 revealed Crown’s inability to run its new casino operations in Sydney. The inquiry was imposed as a result of several concerns related to money laundering in Crowns gaming venues.
Crown has faced a series of financial distresses. Its gambling operations have failed to attain profits, while the company has also faced a number of misconduct inquiries in each of the states it currently operates in. Along with the unavoidable COVID-19 lockdowns, Crown has been having an extremely difficult time getting back on track.
All these arguments determined these huge gambling establishments to start a bidding war for Crown.
Star VS Blackstone – the Ultimate Battle
Star Entertainment Group Ltd is Blackstone’s main rival in the heated bidding war. Originally, Star had offered $12.50 per share, but the approach has been recently matched by Blackstone. The new bid helped Crown’s shares go up by 17 points in the stock exchange. While the new offer sends Blackstone in the lead, the numbers are still below Blackstone’s indicative price. This would suggest a shred of doubt that an actual deal would be completed. Crown’s board said they will take Blackstone’s latest proposal into consideration.
The Star-Crown deal is also under the question mark. While Crown had initially favoured Star’s offer over Blackstone’s previous bid, the latter was forced to withdraw its offer citing regulatory uncertainty. At the same time, the company is currently facing its own regulatory probe and misconduct allegations. Star’s legal issues may prove to be much too serious to allow the two companies to resume talks.
According to a Star spokesperson, they will remain open to the idea of exploring future opportunities that would increase their value with Crown by their side. Originally, Star had come up with a strategic game plan aimed at eliminating all competition in the industry by investing in Crown and actively accelerating the gambling market in the country. Recently, Star has initiated a plan to sell and lease back 49% of The Star Sydney.
What Can Be Expected of a Bidding War?
No matter which of the bidders will eventually sign off the deal, one thing is for certain: whenever a billion-dollar acquisition takes place, the entire industry is prone to be reshaped. A recent example is Aristocrat’s $2.9 billion pending acquisition of Playtech giant. All the details of the Arisocrat-Playtech acquisition have been thoroughly covered by True Blue Casinos editor Ryan White.
What Does Aristocrat’s New Playtech Acquisition Mean For The Industry?
The deal would increase the price of shares for both businesses and generate higher financial results. It would also bring more “material scale” in the online gaming and sports betting sectors. More workplaces would be generated by the acquisition as the expanded business would start to operate in 20 jurisdictions regulated by 170 licenses in all parts of the world.
As for the effects on punters and gamers in Australia and other parts of the world, the acquisition would result in a much richer gaming portfolio featuring top-class end-to-end solutions.
Would the same changes take place once the bidding war for Crown would stop?
Provided Star or another gambling establishment would win the bidding war, this would most likely generate similar effects as for the Aristocrat-Playtech acquisition. The deal would have a powerful impact on the industry, as the two companies would join forces and create bigger and better products. On the other hand, Blackstone is a private equity fund and an investment giant with holdings and ownership stakes in Las Vegas casinos. They might choose to focus on an immediate growth plan that would start to generate big profits as soon as possible.
Crown Continues to Be A Valuable and Strategic Asset in the Industry
According to Forager Funds Management’s chief investment officer Steve Johnson, Crown continues to be a top asset with an undeniable strategic value in the industry. In spite of also facing the threat of having its license for Victoria withdrawn, the establishment was allowed to keep operating, thus enabling the bidding war to go on.
Whether Star and Crown will resume talks for an acquisition or a future partnership in the future, it remains to be seen. Should Blackstone win or would a different establishment make a much better bid, one thing is for sure: the gambling industry will win as a result of the acquisition.
