Blackstone has cleared a major final hurdle in its planned $8.9 billion acquisition of Crown Resorts, with the WA government announcing that it has given regulatory approval to the deal.
Most important points:
- The government says the takeover is subject to tough conditions
- Those conditions will be ‘in line’ with the recommendations of the royal commission
- They will contain strategies against money laundering and problem gambling
The US private equity giant had waited for the green light in WA, following Thursday’s announcement that New South Wales and Victorian regulators had approved it as a suitable casino license holder†
If the acquisition is approved by federal court, the sale is likely to result in a $3.36 billion payday for Crown majority shareholder and founder James Packer.
Tony Buti, WA’s Secretary of State for Racing and Gaming, said Friday morning that he and the state’s casino watchdog, the Gaming and Wagering Commission (GWC), had approved Blackstone’s acquisition of Crown, but under strict conditions.
These include a requirement that Blackstone’s institutional investors must not be involved in Crown Perth’s day-to-day operations.
The company would also be subject to enhanced reporting of anti-money laundering and responsible gambling activities, as well as additional audit requirements.
“These terms are in line with some of the recommendations that have emerged from the recent Perth Casino Royal Commission,” he said.
“The state government has already made significant improvements to its regulatory regime and remains committed to establishing an even stricter regulatory and governance framework to ensure that everyone who owns or manages Perth’s casino is held accountable.”
Mr Buti said the conditions, coupled with upcoming reforms, would ensure proper standards were maintained at Perth’s casino.
The Victorian Gambling and Casino Control Commission (VGCCC) also imposed conditions on Blackstone, including maintaining Crown Melbourne as Australia’s flagship casino.
Crown becomes private company
Crown told the ASX on Friday that if the Federal Court approves the acquisition at a scheduled hearing on Wednesday, it would announce a timetable for closing the deal.
It would mean that Crown Resorts would become a private company and would no longer be required to report to the ASX.
dr. Buti said he instructed Blackstone to operate with “the highest standards of governance and operations,” including applying ASX corporate governance principles.
The company will also be required to report all investigations by regulators in Australia and abroad, seek approval for new investors and strengthen its auditing and anti-money laundering reporting.
GWC chairman Lanie Chopping said assessing Blackstone’s application was a “detailed and complex process”.
“The gaming commission’s approval is subject to a number of conditions designed to ensure that the commission oversees and is able to audit any change in licensee’s management or ownership,” she said.
What do we know about Blackstone?
Blackstone is the second largest private equity fund in the world.
In 2021, it reported sales of more than US$20 billion (AU$28 billion), and owns several notable global companies.
According to the website, the company owns $915 billion in assets, nearly a third of which is in real estate.
In 2007, Blackstone bought hotel operator Hilton Worldwide and has since acquired the Bellagio, MGM Grand and Mandalay Bay resorts in Las Vegas.
It also owns the Spanish company Cirsa, which operates 147 casinos in Spain, Italy and Latin America.
Company will not operate with impunity, says expert
University of Western Australia finance professor Raymond Da Silva Rosa says there are concerns about the company’s size and power allowing it to operate with impunity, but he doesn’t think it will.
“There have been some pretty gross violations of the terms of the license on the face of it. And my point is that being a publicly traded company hasn’t prevented that.”
Professor Da Silva Rosa said the sheer size of Blackstone’s business interests gives the government leverage to ensure it complies with the law.
“If it decides whether or not to act in accordance with the law, it will be much more difficult for that company to do business in Australia,” he said.
“In some ways, the fact that a large private equity firm with a lot of interest in Australia has more leverage puts more pressure on the government to sue the company if it doesn’t follow the law.”
He said the only way to ensure more accountable governance is for the government to improve its oversight.
“My feeling is that it’s not so much about the existing governance requirements, but about their enforcement.”
He said it was the regulatory authorities, rather than the ASX, that were not properly overseeing Crown.
“And so I’m arguing for tightening up disclosure requirements as a condition of the license to operate.”
Posted † updated
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