Australia's Federal Court approves Blackstone's $6.1B Crown takeover; James Packer to exit on $2.3B cut

Australia’s Federal Court has approved US private equity giant Blackstone’s AUD 8.9 billion ($6.1 billion) takeover of casino giant Crown Resorts, a deal set to grant renowned billionaire James Packer an AUD 3.36 billion ($2.3 billion) payday in exchange for his 37% stake in the company. The deal will be finalized on June 24, when the money is finally handed over. Packer is set to exit Crown Resorts after that.

The court’s decision was the final step in the approvals process, following greenlight by the state governments in Western Australia, New South Wales and Victoria, where Crown currently operates venues. This deal implies Crown Resorts' conversion into a private company, which will no longer report to the ASX.

The moves against Packer gave the billionaire no choice but to sell out of Crown. This comes after years of scandals, including a company’s fine for illegally promoting gambling in China, where 14 members of the staff were jailed. Additionally, several damaging inquiries found the casino operator enabled money laundering and had links to criminal gangs. 

Packer’s previous attempt to leave the company in 2019 was frustrated when the prospective buyer reneged due to the controversy and details of the deal were leaked. It was Packer’s political wheeling and dealing, and relationship with Chinese businessman Laurence Ho in his bid to build a casino at Sydney’s Barangaroo that led to his undoing and was the catalyst for the New South Wales Bergin inquiry, which found Crown was unfit to hold a casino license, recounts ABC.

Blackstone’s takeover paves the way for Crown’s AUD 2.2 billion ($1.5 billion) Sydney casino at Barangaroo, which has been banned from taking bets since opening in 2020. State regulators have assured it will be subject to strict conditions. 

The New South Wales Independent Liquor and Gaming Authority (ILGA) has been working closely with Crown on plans for a conditional opening of gaming at Crown Sydney, allowing the Authority to monitor the implementation of Crown of its obligations under revised internal control measures. 

Crown Sydney.

The regulator granted Blackstone approval of its suitability to hold a casino license in New South Wales last week. Chairperson Philip Crawford stated the firm was subject to an extensive probity assessment that examined its capacity to address the risk and issues of concern identified in the Bergin Report, an inquiry that examined numerous instances of suspected failures.

Crown Resorts agreed to Blackstone’s takeover offer in February this year, with the company’s board, now chaired by Ziggy Switowski, unanimously backing the proposition. The Blackstone Group is the world’s second-biggest private equity fund. It owns the MGM Grand, Mandalay Bay and Bellagio hotels and casinos in Las Vegas, as well as the Spanish company Cirsa, which operates 147 casinos in Spain, Italy and Latin America.