CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Crown Resorts takeover bid: Is Blackstone being opportunistic?

The Crown share price opened lower on Tuesday, down 2.51% by 10:18AM.

The Deal

Crown Resorts (ticker: CWN) yesterday announced that Blackstone has made an unsolicited non-binding, $11.85 per share takeover bid. That offer represents a significant premium to Crown’s closing price last Friday. For reference, Blackstone already owns 9.9% of Crown.

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The Reaction

Investors responded enthusiastically to the takeover offer, with the Crown share price finishing out Monday 21% higher, at $11.97 per share, just ahead of Blackstone’s bid.

Analysts weigh in

While the takeover offer represented a significant premium to last week's closing price, as Macquarie analysts point out, against Crown’s historical trading range of 7.9x to10.6x EBITDA, the bid may be considered ‘opportunistic’.

The $11.85 per share offer implies a 9.4x FY23 EBITDA, around the mid-point of CWN’s trading range, according to Macquarie.

How we got here

After hitting a 52-week low of $5.64 per share in March 2020, the Crown Resorts share price has rallied, up close to 100% at yesterday's close.

Uncertainties remain

Short-term optimism aside, the company faces to key points of uncertainty that investors will likely closely monitor moving forward. These include:

  • AUSTRAC's ongoing investigation into Crown – which is chiefly focused on customer due diligence and AML/ CMF matters.
  • A royal commission into Crown’s Perth and Melbourne casinos. The comission is set to start on March 24, 2021.

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