Crown opens its books

Blackstone rejected but due diligence allowed

CROWN Resorts will allow US private equity firm Blackstone to proceed with due diligence on a non-exclusive basis, while rebuffing its latest takeover offer, worth $8.5bn.

Despite saying the price did not represent good value, the James Packer-backed Crown has offered the fund manager a look at its books to encourage it to form a higher bid.

Chief executive Steven McCann said Crown’s share price was on an upward trajectory.

“We need to make sure that anyone looking at Crown recognises we are coming off the bottom,” he said. “We are nowhere near that full capacity today.”

His comments came as the casino group told the sharemarket the proposal, at $12.50 cash per share, did not represent compelling value for shareholders.

“The Crown board has offered Blackstone the opportunity to access non-public information to allow Blackstone to undertake initial due diligence inquiries on a nonexclusive basis so that it can formulate a revised proposal that adequately reflects the value of Crown,” it said.

“The Crown board is focused on maximising value for Crown shareholders and will carefully consider any proposal that is consistent with this objective.”

Crown shares closed up 0.7 per cent at $11.02 on Thursday. Blackstone launched its latest takeover bid on November 19 at $12.50 a share, 15c higher than its previous offer.

Beyond what has been available to them for the inquiries in NSW and Victoria, Blackstone will seek more detailed information around financials and management.

Crown will hope that this closer look at the business will extract an increase in the current offer price.

Mr McCann stressed that the due diligence was not exclusive.

“The doors are open to anyone who wants to have a look,” he said.

A spokesman for Blackstone said the firm was appreciative of the different level of engagement with the new Crown board and welcomed that further engagement.

It is unknown what price Crown’s biggest shareholder, billionaire James Packer, will accept for his 37 per cent stake in the casino group, held through his Consolidated Press Holdings company.

However, the decision of the board to “open the kimono” suggests that Packer is a current seller at a price.

Mr McCann said the board wanted to make sure all shareholders got the right price outcome.

“Fundamentally any bidder is going to have to get them over the line as well,” he said.

He would not comment on speculation that rival Star Entertainment might still be interested in a deal.

Star launched a $12bn scrip merger proposal in May but withdrew the offer in July.