Crown Resorts has urged shareholders to vote in favor of an AU$8.9 billion ($6.3 billion) bid from the New York-based investment firm Blackstone Group, saying it will help them to secure their investment in the aftermath of a compliance scandal.
As reported by Asia Gaming Brief, Crown officials wrote, “Having regard to the uncertain operating and regulatory environment in which Crown finds itself and the underlying value of Crown, we believe the scheme represents a fair outcome for Crown shareholders.”
Shareholders were forewarned: “If the scheme does not proceed, the amount which Crown shareholders will be able to realize in terms of price and future dividends will necessarily be uncertain and subject to a number of risks.”
The Foreign Investment Review Board (FIRB) approved the bid last week.
Blackstone made an initial offer of $11.85 per share in March 2021, then raised it to $12.35 cash per share in May of the same year. Both offers were spurned by the Crown board. On January 13, Crown received a revised proposal offering $13.10 cash per share.
Crown Resorts has been the subject of three regulatory inquiries, all of which found it was unsuitable to hold its license in the states in which it operates: Victoria, New South Wales and Western Australia. In all three cases, Crown was given the opportunity to mend its ways and come into compliance with state regulations. The inquiries found numerous deficiencies in Crown’s operations, including money laundering through its flagship Victoria casino.
Although those reviews are now completed, the company is still the subject of a probe from financial crimes regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC). AUSTRAC has begun civil proceedings against Crown Resorts for “serious and systematic” breaches of the law. It alleges that Crown Perth and Crown Melbourne failed to meet their obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006 following an investigation that began in October 2020. As a result of the multistate probe, Crown was not permitted to open its newest casino in Sydney, New South Wales, though the gaming hall may be allowed to operate sometime this year.
