Crown Resorts Limited yesterday announced that it has entered into a scheme implementation deed (Implementation Deed) with a company on behalf of funds managed and advised by Blackstone Inc. and its affiliates (together, Blackstone), under which Blackstone will acquire all of the shares in Crown by way of a scheme of arrangement (Scheme of Arrangement or Scheme) at a price of $13.10 cash per share (Blackstone Transaction).
- Under the terms of the Scheme of Arrangement, Crown shareholders will be entitled to $13.10 cash per share (Scheme Consideration1)
- The Scheme Consideration represents a premium of c.32% to the closing price of Crown shares on 18 November 2021 of $9.90 per share (being the last trading day prior to Crown receiving an acquisition proposal from Blackstone at a price of $12.50 cash per share)
- The Scheme Consideration values Crown’s equity at approximately $8.9 billion and represents an increase in the equity value of more than $845 million to the price of $11.85 cash per share initially offered by Blackstone in March 2021
- The Blackstone Transaction is subject to various conditions (outlined below)
- The Crown Board unanimously recommends that shareholders vote in favour of the Blackstone Transaction in the absence of a Superior Proposal, and subject to an Independent Expert concluding (and continuing to conclude) that the Scheme of Arrangement is in the best interests of Crown shareholders
- Subject to the expected timing of regulatory approvals, the Scheme Meeting is expected to be held in the second quarter of the calendar year 2022
Crown’s Chairman, Ziggy Switkowski, said: “The Board has fully considered the Blackstone Transaction and unanimously recommends the proposal, subject to customary conditions such as an independent expert concluding the transaction is in the best interests of Crown shareholders and there is no superior proposal.
When considering any proposal, the Crown Board has consistently stated it is committed to maximising value for Crown shareholders.
The Crown Board and management have made good progress in addressing a number of significant challenges and issues emerging from the COVID-19 pandemic and various regulatory processes.
Nevertheless, uncertainty remains and having regard to those circumstances and the underlying value of Crown we believe the Blackstone Transaction represents an attractive outcome for shareholders.
The all-cash offer provides shareholders with certainty of value. 1 Capitalised terms have the meaning given to them in the Implementation Deed unless otherwise defined in this document.
“The cash offer under the Scheme of $13.10 cash per share values Crown’s equity at approximately $8.9 billion, 11 per cent higher than the initial offer from Blackstone almost a year ago.
It is now appropriate that the Blackstone Transaction is put to our shareholders for their consideration.” Crown’s Managing Director and Chief Executive Officer, Steve McCann, said: “The announcement today represents a compelling offer for Crown’s shareholders to consider.
The price appropriately reflects the value of Crown’s world-class assets and a global reputation for premium service and experiences.
The agreement with Blackstone also highlights the strength of the Crown brand and confidence in our future as we emerge from some challenging times, which is welcome news for our people, customers and stakeholders.” Background and Overview of the Scheme of Arrangement On 22 March 2021, Crown announced that it had received an unsolicited, non-binding and indicative proposal from Blackstone to acquire all of the shares in Crown by way of a scheme of arrangement at an indicative price of $11.85 cash per share.
On 13 April 2021, Crown announced that Blackstone had written to Crown setting out a modification to the Regulatory Approval Condition of its initial proposal.
On 10 May 2021, Crown announced that it had received a revised proposal from Blackstone at an indicative price of $12.35 cash per share, which was rejected by the Crown Board. On 19 November 2021, Crown announced it had received another proposal from Blackstone for $12.50 cash per share.
On 2 December 2021, Crown announced that the Board viewed this proposal as not representing compelling value for Crown shareholders, however, resolved to offer Blackstone the opportunity to access non-public information to allow Blackstone to undertake initial due diligence inquiries on a non-exclusive basis so that it could formulate a revised proposal that adequately reflected the value of Crown.
Following the consideration of this non-public information during an initial due diligence period, Crown announced on 13 January 2022 that it had received a further revised proposal from Blackstone for $13.10 cash per share on terms and conditions consistent with the proposal announced by Crown to the ASX on 19 November 2021.
Crown also announced that it had decided to provide Blackstone with the opportunity to finalise its due diligence inquiries and negotiate the terms of an Implementation Deed on a non-exclusive basis so that Blackstone could put forward a binding offer. Following completion of due diligence and negotiations in relation to binding documentation, Crown has now entered into the Implementation Deed with Blackstone. Under the terms of the Scheme of Arrangement, Crown shareholders will be entitled to receive $13.10 cash per share subject to all applicable conditions being satisfied or waived, and the Scheme of Arrangement being implemented. Key Conditions and Deal Protections The Blackstone Transaction is subject to various conditions.
A copy of the Implementation Deed, which sets out the terms and conditions of the Blackstone Transaction and associated matters, is attached to this announcement. In summary, conditions for the implementation of the Scheme include:
- the Independent Expert issues an Independent Expert’s Report which concludes (and continues to conclude) that the Scheme is in the best interests of Crown shareholders;
- approval of Australia’s Foreign Investment Review Board (FIRB); • approval from each Gaming Regulatory Authority and counterparty to a Framework Agreement;
- no Gaming Regulatory Event or Material Adverse Change occurring; and
- other customary conditions. Blackstone has already lodged applications with FIRB, the Gaming Regulatory Authorities and the relevant counterparties to Framework Agreements in respect of the approvals it requires for the Blackstone Transaction.
The Implementation Deed is subject to customary deal protections for Blackstone including no shop, no talk and no due diligence obligations on Crown. Crown is also bound by other customary provisions including notification obligations and matching rights in the event of a competing proposal. The Implementation Deed also sets out certain circumstances in which a break fee of $89 million or approximately 1% of equity value would be payable to Blackstone, or a reverse break fee of $89 million payable to Crown.
Full details of the conditions to the Scheme and other agreed terms are set out in the Implementation Deed, a copy of which is attached to this announcement. Indicative Timetable and Next Steps Crown intends to send an Explanatory Booklet to Crown shareholders in March / April 2022. The Explanatory Booklet will contain information relating to the Scheme of Arrangement.
It will also contain an Independent Expert’s Report on whether the Scheme of Arrangement is in the best interests of Crown shareholders.
The Crown Board has appointed Grant Samuel & Associates Pty Ltd as the Independent Expert. A Scheme Meeting is expected to be held in the second quarter of the calendar year 2022 and, if approved, the Scheme would be implemented shortly thereafter. These dates are indicative and may be subject to change due to a range of factors, including (but not limited to) the expected timing of necessary approvals.
Edited by: Stephen Morton
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