This article is from the Australian Property Journal archive
CROWN Resorts has rebuked the $8.2 billion takeover offer from US private equity giant Blackstone, while leaving the door ajar for a tie-up with The Star Entertainment Group that could unleash billions of prime real estate to the market.
Crown yesterday said Blackstone’s bumped-up offer of $12.35 cash per share “undervalues” the group, and that its board considered a range of scenarios given the regulatory inquiries in relation to Crown which are underway.
It said it also considered the proposal conditions, including the regulatory approval conditions, and decided “there is significant uncertainty as to the timing and outcome of the regulatory approval processes”.
Crown said its board also considered the “fundamental value of Crown”, which included the significant value of its tangible assets, comprising land, hotels and gaming and entertainment facilities; and its “significant investment” in Crown Sydney, with over $2.0 billion of the $2.2 billion gross project cost spent to date and which opened to the public in a restricted capacity on at the end of 2020 and is “yet to provide a meaningful contribution to Crown’s earnings”.
In a separate announcement, Crown said it has not yet formed a view on the merits of Star’s merger proposal, which would create a $12 billion company.
“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.”
The Star’s chairman John O’Neill has said the merged group would seek to engage with a range of investors on a potential sale and leaseback of the enlarged property portfolio, potentially unlocking billions of dollars for the group.
Citi analysis suggests Crown’s property portfolio is worth as much as $5.6 billion.
That potential sale and leaseback would offer investors a rare second chance to score these assets after Crown scuppered plans to spin some of its properties into a $2 billion hotel REIT.
It would also give players an opportunity to purchase Crown Towers Perth and Crown Towers Melbourne, which were previously excluded from the proposed REIT.
Crown also owns the One Queensbridge development site that it bought from joint venture partner Schiavello for $60 million. In 2019 Victorian Planning Minister Richard Wynne refused to grant an extension of time to build the proposed $1.75 billion project.
Crown has since kept its options open and said the site “could accommodate a fourth Crown hotel.”
Star’s portfolio has developments worth in excess of $5 billion, including the Star Gold Coast which has a $2 billion masterplan to deliver four hotel and apartment towers, and the $3.6 billion Queen’s Wharf development in Brisbane.
