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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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