The Crown Resorts Ltd (ASX: CWN) share price will be under the spotlight today after receiving a large takeover offer.
What share price is the Crown bid?
Crown has received a non-binding indicative takeover offer from Blackstone at an indicative price of $11.85 per share, reduced by any dividends paid.
This share price represents a premium of 19% to the average Crown share price since the release of its FY21 half-year result.
Blackstone actually already owns a 9.99% shareholding of Crown after buying it from Melco Resorts & Entertainment Limited for $8.15 per share in April 2020.
The takeover proposal is subject to a number of conditions including completing due diligence, arranging debt finance and a unanimous Crown board recommendation.
What does the board think?
The Crown board stated that it: “has not formed a view on the merits of the proposal. It will now commence a process to assess the proposal, having regard to the value and terms of the proposal and other considerations. It will also engage with relevant stakeholders including regulatory authorities.”
Crown reassured shareholders, telling them they don’t need to do anything in relation to the bid at this stage. There is no certainty that the proposal will result in a transaction.
Crown has hired UBS as its financial adviser and Allens as the legal adviser to help with this proposal.
What to make of this
This bid has certainly come at a difficult time for Crown as it faces investigations in both Western Australia and Victoria because of the alleged links to crime.
I’m sure Crown shareholders would appreciate the interest from a potential suitor. When you look at the pre-COVID-19 share price, this offer is lower than quite a bit of that time period. However, we’re in a new world now where conferences are few, tourism is down and the relationship with China has significantly worsened.
Considering all of the above, I actually think that this offer is quite fair. Crown Sydney is facing approval difficulties and it may be for the Crown best for the business to go under new ownership. But it’s also a really good deal for Blackstone if it can re-activate most of the business as the COVID-19 vaccine rolls out.
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