Crown (ASX:CWN) share price jumps 16% amid takeover approach

Crown is a takeover target again…

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The Crown Resorts Ltd (ASX: CWN) share price is on course to end the week on a positive note.

At the time of writing, the casino and resorts operator’s shares are up 16% to $11.50.

Why is the Crown share price surging higher?

Investors have been bidding the Crown share price higher today after it received a takeover approach from private equity firm, Blackstone.

According to the release, Blackstone has made an unsolicited and non-binding proposal to acquire all of the shares in Crown by way of a scheme of arrangement at a price of $12.50 cash per share. This will be reduced by the value of any dividends or distributions declared or paid by Crown.

Based on the Crown share price at the close of play on Thursday, this offer represents a premium of 26.5%.

It is also a premium to previous offers that Blackstone has made for Crown. For example, in March the private equity firm offered $11.85 cash per share and in May it lifted its offer to $12.35 cash per share.

Crown notes that the proposal remains subject to a number of conditions. This includes due diligence on an exclusive basis, a unanimous recommendation from the Crown Board, Blackstone receiving final approval from its investment committees, and the execution of a binding implementation agreement.

It would also be subject to approval from state casino regulators. Though, the release notes that Blackstone has already been in touch with regulators, which have indicated that there is no reason to believe that an approval would not be realised.

Blackstone also highlights that Crown is dealing with regulators and AUSTRAC. As such, it has stated that it is prepared to proceed with the proposed transaction upon receiving final confirmation of suitability from the regulators. Though, it has warned that its offer could be impacted by the outcome of these matters.

What now?

The Crown Board advised that it has not yet formed a view on the merits of the proposal.

It will now assess it, having regard to the value and terms of the proposal and other considerations. The Board also intends to engage with relevant stakeholders, including regulatory authorities.

For now, it has told shareholders that they do not need to take any action in relation to the proposal and warned that there is no certainty it will result in a transaction.

All eyes will be on Star Entertainment Group Ltd (ASX: SGR) in the coming days. It was interested in merging with Crown earlier this year before pulling the plug on the deal due to regulatory uncertainty.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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