The board of Crown Resorts (ASX: CWN) has rejected an $8 billion takeover proposal from American investment management company Blackstone today, claiming it undervalues the company.
In the meantime, the $12 billion merger proposal from Star Entertainment (ASX: SGR) remains on the table as the company's board is still considering the offer's merits.
The company's board says the Blackstone bid undervalues Crown when considering the value of its assets, land, hotels, gaming and entertainment facilities.
This is especially in light of the recent $2.2 billion spend put toward the construction of the new Crown Sydney tower in Barangaroo. That new hotel and casino opened to the public in late 2020, prior to the New South Wales Independent Liquor & Gaming Authority (ILGA) finding the company unsuitable to be given a casino licence.
In an ASX announcement, CWN says it also carefully considered the conditions of Blackstone's proposal, including the regulatory approval conditions.
"Despite Blackstone's modifications of these conditions, the board believes there is significant uncertainty as to the timing and outcome of the regulatory approval processes," says Crown.
"As a result, the conditions of the revised proposal as currently understood present an unacceptable level of regulatory uncertainty for Crown shareholders."
In addition, Crown says the takeover could be detrimental to shareholders as "the potentially long timeframe involved in implementing the revised proposal and Blackstone's requirement that any dividends be paid to shareholders during this time would be deducted from the indicative offer price of $12.35 per share."
As for the Star Entertainment Group's merger proposal, Crown says it has not yet formed a view on the merits of the bid.
"To facilitate the Crown board's assessment of the merger proposal, Crown has requested Star to provide certain information to allow the Crown board to better understand various preliminary matters," says CWN.
"Crown shareholders do not need to take any action in relation to the merger proposal at this stage. This is no certainty that the merger proposal will result in a transaction."
The announcement comes after a revelation from Crown that it will pay $12 million towards the costs of the Bergin Inquiry that deemed it "unsuitable" to run a casino in NSW, after reaching a deal with regulators to make all gaming in its casinos cashless.
Shares in CWN are up 0.42 per cent to $13.10 per share at 10.12am AEST.
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