The long-awaited and heavily-scrutinised takeover of casino and hotel giant Crown Resorts (ASX: CWN) by US investment firm Blackstone has today been completed, with the latter championing the milestone as its “largest investment to date in Asia”.
After receiving regulatory approval from gambling watchdogs in New South Wales, Victoria and Western Australia, as well as the Federal Court’s tick of approval and a vote of confidence from shareholders, the two companies have officially come together today.
“We are thrilled to become the new owner of Crown, bringing our expertise in hospitality to help the company achieve its full potential as a leading travel and leisure company,” Blackstone head of real estate acquisitions Asia, Alan Miyasaki, said of the deal valued at $8.9 billion.
“We first invested in Crown two years ago, seeing the tremendous underlying potential of the company and its people.
“We look forward to working with the teams at Crown and applying our experience in owning and operating marquee hospitality brands around the globe with the highest levels of ethics and integrity to create something unique for employees, local communities, and visitors.”
The transaction comprises three premium resort and casino properties in Melbourne, Perth and Sydney - the staff of which Blackstone said it would work closely with to transform the properties into “world-class entertainment destinations and continue Crown’s transformation to operate at the highest standards of compliance, governance, and integrity.”
“This is a great opportunity that plays to Blackstone’s strengths – investing significant capital and resources to rebuild Crown into an iconic destination for travel and leisure that everyone can be proud of,” Blackstone head of real estate Australia Chris Tynan said.
“Blackstone has built a strong Australian presence over the last 12 years. We look forward to supporting the local economy, creating jobs, and attracting visitors to Crown’s exceptional properties.”
Crown Resorts CEO Steve McCann said today marked a “new era” for the hotel and gambling company.
“Over recent times, Crown has undergone immense transformation, and we know under Blackstone’s ownership, we will realise our vision to deliver world-class entertainment experiences and a safe and responsible gaming environment,” McCann said.
“Australian tourism has entered a recovery phase, and we believe this trend will continue. Crown’s suite of outstanding assets has built a loyal customer base over the past 28 years, and we are excited about the opportunities ahead of us as we revitalise Melbourne and Perth and celebrate the addition of Sydney.
“With Blackstone’s investment and expertise, we’re confident Crown will cement its place on the global stage as one of the world’s leading owners and operators of integrated resorts.”
The acquisition of Crown is not Blackstone’s first dip into the world of hospitality. Previously, the company owned The Cosmopolitan of Las Vegas, which it sold earlier this year.
During the eight-year ownership, the company said it implemented “significant operational changes, developed best-in-class management team, and invested significant capital to renovate 3,000 guest rooms and enhance F&B offerings”.
In addition, Blackstone was the former owner of Hilton Hotels Corporation for 11 years, during which it claimed to have doubled the size of the company to more than 5,300 properties and 400,000 employees worldwide.
The journey to get to this point was anything but smooth sailing for Blackstone however, having faced a number of regulatory hurdles that emerged in the wake of the Bergin Inquiry which probed the group’s operations and deemed the company unsuitable to hold a casino licence in NSW.
Just two days ago, Crown was permitted to start gambling operations at its swanky new tower in Sydney which will be monitored closely by the Independent Liquor and Gaming Authority (ILGA) whilst it conducts the final phase of a gaming licence suitability assessment.
The imposing structure at Barangaroo in Darling Harbour was all set to open in December 2020 when the ILGA put the launch on hold pending the outcome of the Bergin Inquiry, which found numerous failings at the group's Melbourne and Perth operations, including revelations of the infiltration of "criminal elements", the probability of money laundering, problems surrounding its management of junket operations, and missing the mark for protecting staff in China.
The explosive conclusions from the inquiry released in February 2021 prompted Royal Commissions in Victoria and WA, with the former leading to the handing down of an $80 million fine recently, and the latter only concluded as recently as March this year.
Competitor The Star Entertainment Group (ASX: SGR) was also in the crosshairs of regulators after years of Crown taking the spotlight over its wrongdoing, and in late May the counsel assisting the inquiry recommended Star was not suitable to hold a casino licence in Sydney and that it had misled shareholders.
The malfeasance and upswell of public criticism of these two casino companies prompted wide-reaching legislative changes in four Australian states - WA, VIC, NSW and QLD - that will impose harsher penalties within the sector and make more efforts to addressing problem gambling.
Completion of the takeover also marks the end of an era for James Packer, who has been bought out by Blackstone as part of the transaction to the tune of around $3.26 billion.
Crown shareholders meanwhile received $13.10 cash per share for each share held - paid today in respect of holdings as of 7pm on 17 June 2022.
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