Shashwat Amathi and Byron Kaye

SYDNEY, (Reuters) – Crown Resorts Ltd backed a Blackstone buyout worth $6.3 billion on Monday. This gave billionaire James Packer an exit path from the Australian casino company beset with scandals and regulatory setbacks.

Packer will turn in his chips after creating Crown to move away from Packer’s media empire and to reinvent the Packer family as a gambling company.

Crown is valued at A$13.10 less than its 2019 share price, prior to COVID-19 restrictions. However, Chief Executive Steve McCann claimed that the cash offer provides shareholders with much-needed security.

Crown shares rose by 2% to A$12.65 Monday.

McCann stated that when you look at a change in control it is not the trading price or today’s earnings. He was responding to questions about how McCann’s company’s decision would be affected by post-pandemic trading, intense regulatory scrutiny, and other factors.

It’s an even more comprehensive assessment. It’s a fair price.

Blackstone will assume control of a company that is under regulator scrutiny. Official investigations revealed it had knowingly been involved in criminal organizations and misled authorities.

Crown’s A$2.2 billion Sydney casino skyscraper remains without a license for gambling, almost a full year after opening. Crown’s primary earner is its Melbourne casino. It must be supervised by a government official for two consecutive years.

“Moving toward a new ownership structure, is an important first step in resolving many regulatory concerns that were highlighted,” stated Angus Gluskie (managing director, White Funds Management), which holds Crown shares.

John Ayoub was a Wilson Asset Management portfolio manger who holds Crown shares. John Ayoub supported Blackstone’s fourth attempt to approve the deal.

Ayoub declared, “In light what has happened in the past few years, it is a great outcome for all involved.”

Packer, Crown’s largest shareholder at 37% shares of the company’s capital, will play a pivotal role in reaching the shareholder approval threshold of 75%. A spokesperson for Packer declined to comment, stating that he would leave with approximately A$3.3 billion.

Chris Tynan (senior managing director, head of realty at Blackstone Australia), stated that the company is “very happy” to have reached a binding agreement with Crown.

ENDING OF AN ERA

Packer had been withdrawing from corporate life over the years. A decision to support this deal would end Australia’s longest-running business dynasties.

Frank Packer, Packer’s grandfather as a journalist was the founder of Australian Consolidated Press in 1936. This newspaper and magazine giant would be dominant for over 50 years.

Kerry Packer was Frank’s father and son, Kerry died in 2005. This increased the power of the media empire.

James decided to take the family business on a new path and split Publishing and Broadcasting Ltd into Consolidated Media Holdings. This allowed him to preserve the heritage assets and Crown Ltd which was the driving force behind his plans for gambling. He quickly sold all media assets.

Crown found itself in deep trouble within 10 years. While Crown was pursuing rapid expansion plans to Macau, Las Vegas, and Australia, 19 members of its staff were arrested in China because they had violated the country’s gambling laws.

Packer was forced to abandon all foreign business dealings and quit corporate life.

Regulators still need to approve the Blackstone deal. It is anticipated that a shareholder meeting will be held to approve it in the June quarter.

($1 = 1.4025 Australian dollars)