- »BGH Capital Throw its Hat in Crown Takeover Ring
BGH Capital Throw its Hat in Crown Takeover Ring
Another potential suitor is considering lining up an offer to take over embattled casino operator Crown Resorts.
The Australian Financial Review reports that as BGH Capital is considering a tilt at Crown Resorts, following American private equity groups Blackstone and Oaktree Capital trying to get Crown to engage on their respective indicative offers, it is understood the purveyor of Australia’s biggest buyout fund is thinking about a run of its own.
Sources said BGH Capital had yet to make an offer, or formally approach Crown, although the target’s camp is aware of a handful of interested parties.
Blackstone and Oaktree are just two.
The big question is how BGH Capital would fund such a proposal and whether it could go head-to-head with a global buyout titan and experienced casino operator like Blackstone.
The Australian firm has a $2.6 billion buyout fund and typically writes cheques worth up to a few hundred million dollars.
Crown is a substantially bigger bite.
Blackstone and Oaktree flag interest in Crown
Blackstone’s $11.85 a share proposal, which is yet to get a yes or no from Crown’s board, valued the casinos group at about $9 billion, including debt.
BGH Capital could draw in some of its big limited partners as it has done in the past, such as Australian Super and Canadians Ontario Teachers’ Pension Plan, Canada Pension Plan Investment Board and BCIMC, although they may need convincing to delve into a big casino investment.
BGH could also try to hive off some of Crown’s properties to a real estate investor, however that would be seriously difficult in an environment where governments have claim over earnings attached to Crown’s properties and an Opco/Propco split would require legislative change.
Crown is not in the position to be asking for favours from governments.
Of course it is not the first time BGH Capital’s principals have had cause to think about investing in Crown.
Six years ago TPG Capital, then run in Australia by BGH founder Ben Gray and involving fellow BGH founder Simon Harle, was in talks to bankroll a Crown privatisation plan that would’ve had them invested alongside Packer.
Those talks fell over and the key protagonists fell out.
Packer remains the kingmaker at Crown with a 37 per cent stake and his Consolidated Press Holdings has Moelis Australia in its corner.
The other big question is whether Blackstone, BGH, Oaktree and others are even within cooee of the Crown board’s price expectation.
Crown shares have run hard since Blackstone lobbed its indicative bid, closing at $12.12 on Wednesday.
The run makes it easy to forget the substantial regulatory concerns facing the company.
Should BGH jump, we’re sure Crown will announce it.
Crown’s decision to reveal Oaktree’s high-level proposal on Monday showed it was in the mood to reveal all offers from serious suitors.
The interest also comes as BGH has been working to prise Woolworths’ liquor and gaming business, Endeavour Drinks, away from its run at the ASX-boards.
That effort is also looking less likely by the day.
Oaktree bids to buy Packer’s Crown shares
James Packer’s majority stake in Crown Resorts could be purchased by an investment firm, if it has its way.
News.com.au reported in April that Oaktree Investments has given a non-binding and indicative proposal to Crown Resorts to buy back shares owned by the billionaire’s private company Consolidated Press Holdings.
Oaktree’s proposed details an investment funding of nearly $3 billion to Crown in order to buy back “some or all” of the shares held by CPH.
Oaktree would “provide a funding commitment of up to A$3 billion to Crown via a structured instrument, with the proceeds to be used by Crown to buy back some or all of the Crown shares, which are held by CPH on a selective basis.”
CPH holds a share ownership in Crown of about 37 per cent, making Mr Packer the largest investor in the nation’s largest gaming group.
Mr Packer’s influence over the Crown board as majority shareholder has been scrutinised by a NSW probe into the casino that determined the company was not suitable to hold a gaming licence in the state because of evidence of mismanagement and money laundering.
Findings from the NSW Independent Liquor and Gaming Authority inquiry also found Mr Packer was not a suitable person to be associated with the casino.
Commissioner Patricia BerginSC said Mr Packer’s influence would hinder the company’s ability to gain approval to open the gaming floor of its $2.2 billion Barangaroo casino in Sydney.
Crown said the board was yet to form a view on Oaktree’s proposal but was assessing the potential deal.
A buyback would need to be approved by Crown shareholders.