Rivkin has a buy instruction for shareholders up to 12.70Crown Resorts Limited is Australia's largest gaming and entertainment group which had, in April 2018, a market capitalisation of just over A$8.7 billion.Current advice: Buy CWN at no higher than $12.70
Latest recommendation: 14 February 2022, 11:45 am
CWN has finally announced that a binding scheme implementation agreement has been signed with Blackstone that will see shareholders paid $13.10 per share. While James Packer’s intentions have not been announced, it’s unlikely a deal would’ve been signed without his support given the 75% voting support required. As Blackstone is well-advanced in the process with FIRB and gaming authority applications having commenced last year, the estimate is for a scheme meeting in the second quarter of this year which would suggest a holding time of no more than four and a half months at a maximum.
With international borders set to open soon and the bruising royal commissions into CWN’s behaviour behind the company, Blackstone’s timing is opportune, and it seems likely the other suitors waiting in the wings (such as Star Entertainment and Oaktree Private Equity) will dust off their previous work on a potential deal. Star (SGR) stands to reap a huge chunk of synergies in combining the two companies but is facing its own gaming regulatory issues, whereas Oaktree’s previous proposal was more a recapitalisation, but it clearly sees value in the company.
The deal is subject to customary conditions, with none standing out as a concern (such as an index fall clause which sometimes appear in volatile markets). We are therefore recommending members buy CWN at no higher than $12.70 for a short-term, low risk investment on the hope of further activity, but with an acceptable return of 3.1% if no other bidders emerge.
