Blackstone has cleared a major final hurdle in its planned $8.9 billion takeover of Crown Resorts, with the WA government announcing it has given regulatory approval to the deal.
- The government says the acquisition is subject to tough conditions
- Those conditions will ‘align’ with royal commission recommendations
- They will include strategies against money laundering and problem gambling
The US private equity giant had been waiting for the green light in WA, after Thursday’s announcement that New South Wales and Victorian regulators had approved it as a suitable holder of a casino licence.
If the takeover is approved by the Federal Court, the sale is likely to result in a $3.36 billion payday for Crown’s majority shareholder and founder James Packer.
WA’s Racing and Gaming Minister Tony Buti said on Friday morning that he and the state’s casino watchdog, the Gaming and Wagering Commission (GWC), had approved Blackstone’s acquisition of Crown, but with strict conditions.
These include requiring that Blackstone’s institutional investors cannot be involved in the day-to-day operations of Crown Perth.
The company would also be subject to enhanced reporting of anti-money laundering and responsible gambling activities, as well as additional auditing requirements.
“These conditions align with a number of the recommendations stemming from the recent Perth Casino Royal Commission,” he said.
“The state government has already made significant improvements to the regulatory regime and remains committed to establishing an even tougher regulatory and governance framework to ensure whoever owns or runs Perth’s casino is held to account.”
Mr Buti said the conditions, combined with upcoming reforms, would ensure appropriate standards were upheld at Perth’s casino.
The Victorian Gambling and Casino Control Commission (VGCCC) also imposed conditions on Blackstone, including that it maintain Crown Melbourne as its Australian flagship casino.
Crown to become private company
Crown told the ASX on Friday that if the Federal Court approved the takeover at a scheduled hearing on Wednesday, it would announce a timetable for the deal to be completed.
It would mean that Crown Resorts would become a private company and no longer be required to report to the ASX.
Dr Buti said he had directed 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 overseas, seek approval for any new investors and strengthen its auditing and anti-money laundering reporting.
GWC chair Lanie Chopping said assessing Blackstone’s application had been a “detailed and complex process”.
“The Gaming and Wagering Commission’s probity approval has been granted subject to a number of conditions designed to ensure that the commission has oversight and the capacity to monitor any change in licensee management or ownership,” she said.
What do we know about Blackstone?
Blackstone is the second biggest private equity fund in the world.
In 2021, it reported revenue of more than US$20 billion (AU$28 billion), and owns several notable global companies.
According to its website, the company hold US$915 billion in assets, with almost a third of that in real estate.
In 2007, Blackstone purchased hotel operator Hilton Worldwide, and has since purchased the Bellagio, MGM Grand and Mandalay Bay resorts in Las Vegas.
It also owns Spanish company Cirsa, which operates 147 casinos in Spain, Italy and Latin America.
Company will not operate with impunity, says expert
Finance professor Raymond Da Silva Rosa from the University of Western Australia says there is concern the size and power of the company could allow it to operate with impunity — but he does not think that will be the case.
“There have been some fairly egregious, on the face of it, violations of the terms of its licence. And my point is, being a public company actually hasn’t stopped that from happening.”
Professor Da Silva Rosa said the extent of Blackstone’s business interests provides the government with leverage when it comes to ensuring it adheres to the law.
“If it decides to act up or not act in accordance with the law, it becomes much more difficult for that company to do business in Australia,” he said.
“In some ways, being a large private equity firm, with a lot of interest in Australia gives the government more leverage, it’s got more points of pressure to apply to the company if it doesn’t adhere to the law.”
He said the only way to ensure greater responsible governance was for the government to improve its oversight.
“My sense is that it’s not so much even the existing governance requirements that’s the issue, but really their enforcement.”
He said it was regulatory authorities, rather than the ASX, who failed to provide proper oversight of Crown.
“And so I would advocate a tightening up of the disclosure requirements as a condition of the licence to operate.”
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