Because selling would allow shareholders to avoid "the uncertainties and risks" of the business, the Crown Resorts board has advised shareholders to support Blackstone's planned takeover of the company.
Hotel Crown
Shareholders will vote on the deal at Crown's meeting, and the remarks appeared in a plan document that was disclosed before the meeting. The document lays forth many arguments that shareholders can use to support or oppose the transaction.
According to the board's analysis, Crown's indicated multiples are fair in comparison to other companies in the market.
Shares of Crown are valued at $13.10 (£7.48/€8.81/$9.84) in the Blackstone proposal. The board of directors made note in the document that the deal's revenue multiple will be comparable to other casino operators in the US and Australia. Casinos in Singapore, Macau, and New Zealand wouldn't even come close to it.
"Ensures certainty of value" for shareholders' investment and avoids "the uncertainties and risks associated with an ongoing investment in the Crown business or assets" according to the document, which further states that the all-cash plan consideration of AUS$13.10 per share.
Crown shareholders' ability to realise price and future dividends is "inevitably uncertain" and "subject to a number of risks" if the plan does not move forward, the statement stated.
These risks, according to the report, may stem from potential future regulations in the three Australian states where Crown runs a resort. Crown has been under scrutiny as of late, with assessments in Western Australia, New South Wales and Victoria all finding the company "unsuitable" for a gaming licence.
All of the audits cast doubt on Crown's management structure and uncovered evidence of money laundering and connections to junkets with ties to organised crime at the operator's resorts.
But all three investigations into Crown found that the operator could keep running the casino as long as it made some adjustments.
Shareholders may want to reject the plan for a number of reasons listed in the document. These include, but are not limited to, disagreeing with the independent expert's evaluation or wanting a say in future financial choices made by the Crown.
A majority vote of 75% is required for the plan to be approved.
A number of critical clearances concerning Blackstone's purchase of Crown Resorts were received yesterday (March 29).
Additionally, Crown claimed that an impartial expert has determined that the transaction is just and beneficial for Crown shareholders.
The acquisition proposal was the highest one obtained in a transparent and competitive process, according to the expert assessment provided by Grant Samuel and Associates Pty Limited.
In January of last year, Blackstone initially put up a bid of AUS$8.02bn (£4.47bn/€5.21bn/US$6.19bn) to purchase Crown.
The proposal was increased to $8.87 billion after this was rejected. The Crown board subsequently gave their unanimous approval to this.
