Australias Crown Resorts has knocked back a takeover bid from American multinational private equity and hedge fund giant The Blackstone Group, claiming its offer undervalues its assets and future earnings power.
However, a merger proposal from domestic rival Star Entertainment Group remains very much on the table.
In a series of filings early Monday morning, Crown said it has yet to form any view on Stars merger proposal but to facilitate its assessment has requested Star to provide certain information to allow the Crown Board to better understand various preliminary matters.
As previously reported by Inside Asian Gaming, Stars merger proposal would see current Crown shareholders retain 59% of shares in the new entity with Star shareholders holding the other 41%.
Star said at the time it believes a merger represents a compelling value proposition for all shareholders by creating a national tourism and entertainment leader with a world-class portfolio of integrated resorts with enhanced scale and geographic earnings diversification, significant balance sheet strength and free cash flow generation.
While Star was one of three offers on the table it may now find itself in pole position with Crown also revealing Monday that it had opted against accepting a revised and improved offer from Blackstone to acquire all Crown shares at AU$12.35 per share increased from an original offer of AU$11.85 per share.
The Board has carefully considered the Revised Proposal, including obtaining advice from its financial and legal advisers, it said. The Board has had regard to discussions with Blackstone (and its financial and legal advisers) and various regulatory authorities. The Board has also considered feedback from shareholders.
The Board has unanimously concluded that the Revised Proposal undervalues Crown and is not in the best interests of Crowns shareholders. In coming to this conclusion, the Board considered a range of scenarios given the regulatory inquiries in relation to Crown which are underway.
The Board also carefully considered the conditions of the Revised Proposal, including the regulatory approval conditions. Despite Blackstones modification of these conditions, the Board believes there is significant uncertainty as to the timing and outcome of the regulatory approval processes. As a result, the conditions of the Revised Proposal as currently understood present an unacceptable level of regulatory uncertainty for Crown shareholders.
Crown added that it had taken a range of factors into consideration when assessing the Blackstone bid, including the strategic value of its assets, the value of its tangible assets including land, gaming and hotel facilities, its AU$2.2 billion investment into Crown Sydney, the timing of the proposal given the impact of COVID-19 and more.
The Board is committed to maximizing value for all Crown shareholders and will carefully consider any acquisition proposal that is consistent with this objective, the company said.