Takeover bid from Blackstone for Crown

For years, Crown was under investigation. The focus was, for example, money laundering and a violation of the applicable license provisions. The latter arose because the then CEO of Crown was in a business relationship with Stanley Ho. Although all of this was partially denied, the allegations could be confirmed through the investigation. This led in part to the revocation of the license. Now, however, a rescue could come for Crown: Blackstone has submitted a takeover bid.


Crown has lost the license for the new casino in Barangaroo. Despite the money laundering affair, Blackstone wants to take over Crown.(©Jutta53/Pixaba)

Reasons for license withdrawal at Crown

Fortunately, Crown not lost all licenses. It's just thelicense for the newly built casino in Barangaroo. The license withdrawal also happened before the opening of the casino. It should be noted, however, that the casino cost a few million dollars to build. One piece of positive news in this context is that the license is not lost forever. Crown has the chance to comply with the measures set and still get the license.

One of these measuresrequired a change of management. Although Ken Barton denied knowing anything about the incidents or even having been involved, he announced his retirement a few weeks ago. Some may see this as confirmation that they are not innocent.

During the course of the investigation, several business accounts were checked. As a result,money laundering was carried out across all business accounts. This resulted in Barangaroo's license being revoked. In the further course, the licenses for the other casinos will be checked. The focus of the investigations is the casino in Perth.

Another problem is seen in the previouscollaboration with Junket Operators who broker gambling trips. It was only through this that it was possible to smuggle in rich people from China who were involved in criminal activities. Furthermore, it was criticized that a business relationship with Ho was still maintained. Such a is prohibited under the license condition.

Blackstone offers more than 6 billion US dollars

Blackstone'stakeover bid came as a great surprise. At least Crown hadn't expected it. Blackstone is an investment company based in New York. This company is one of theworld's largest investment companies and focuses on real estate, private equity, credit and hedge funds. The importance of this company can be illustrated using two examples: In 2007, Blackstone took over the Hilton hotel chain. Blackstone also owns more than 3,000 apartments in Berlin.

However, how did Blackstone come up with the idea of ​​acquiring Crown? This may be becauseBlackstone already owns 10 percent of Crown. However, that could prevent a takeover. The company did not acquire the stake directly, but via Melco Resorts & Entertainment Limited. Lawrence Ho works at this company, as CEO. Under the terms of the license, Crown is not allowed to have any contact with Stanley Ho. However, the investment was processed through Ho when Ken Benton was not yet CEO. A renewed indication that Ken Benton is innocent.

Takeover offer must be legally reviewed

The background and the interaction of different companies means that the takeover must be legally reviewed. This was also announced by Crown's current board of directors, who also confirmed that they will work with all key stakeholders andthe relevant regulator.

To review the offer, Crown played it safe and retained UBS as financial advisor and Allens as legal advisor. It is also questionable whetherduring the further investigations a takeover is even possible from a legal point of view. At the very least, Blackstone would have to comply with the measures required by the supervisory authority. It is quite conceivable that Blackstone will be subject to more frequent and stricter scrutiny by the authorities in the event of a possible takeover.

Cooperation with Junket Operators would still be forbidden. This is also because in Australia customers are not allowed to visit casinos if visiting a casino is prohibited in their own country. For this reason it isgenerally forbidden for players from China to visit the casinos of Australia.

Would Blackstone have to apply for a new license?

The Australian consulate is now also suspected of having given the players from China a visa, although this was not legally possible. In addition, theCrown employees are currently being checked to see whether they have the necessary qualifications. Last but not least, the financial system is subject to an audit. As long as these investigations are not completed, the question remains whether a takeover is even possible.

It is also conceivable that all licenses will be withdrawn from Crown after further investigations. If that were the case, Blackstone would have to seek its own license. Nobody can predict how strict these would be. However, sinceBlackstone is in connection with Melco, a separate license could become difficult. At the very least, it must be assumed that having your own license comes with very strict conditions. After all, similar incidents must be prevented in the future.

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The article was published on April 12th, 2021 in the magazine by cpaws-ov.org under the keywords, ,,,,,, || |126 released.
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