Crown pushes the share market casino into action
Some say that share markets are just glorified casinos tacked on to the economy so it was probably appropriate that trade in a real-life casino dominated the Australian market on Friday.
Investors in Crown Resorts (ASX: CWN) shares have been doing it tough recently as a welter of inquiries found serious wrongdoing on a fairly widespread scale so confirmation of a higher offer from former suitor Blackstone was music to their ears.
News of the $8.46 billion refreshed offer sent Crown shares zooming upwards from their previous close of $9.90 to close more than 16% higher at $11.54, which is still a bit shy of the $12.50 a share that Blackstone is offering but is probably a reasonable discount given the likely remaining regulatory dramas.
Royal Commission licence decision key to bid
The main precursor to the renewed bid was the decision by the Victorian royal commission that Crown should keep the licence for its massive Melbourne casino, despite numerous breaches that were described as a “disgrace”, along with a host of other nasty adjectives.
The big question now is whether major 38% shareholder James Packer will be amenable to the offer, with some claims that he will only look at offers that begin above $13 a share but you can understand Blackstone wanting to keep jacking their previous offers up marginally, given the regulatory firestorm.
Blackstone is obviously hopeful this bid might do the trick, with the main condition of the bid being that Crown hangs on to its three casino licences, which seems likely.
Now, shareholders will be hoping for the return to the table of Star Entertainment, which is ensnared at the moment in its own regulatory nightmare which is distracting but is unlikely to prevent it from grabbing a chance to become the dominant monopolistic force in Australian casinos.
Star withdrew its earlier $12 billion merger proposal with Crown in July, citing uncertainty around the casino licences posed by the royal commissions in Victoria and Western Australia.
A bidding war would be the ideal solution for shareholders but obviously may not eventuate.
Banks and miners hold the ASX 200 back
The casino news helped the ASX200 to rise 0.2% or 12.5 points to 7391.7 points but the market still finished lower for the week with slumping prices for the big banks and miners doing the most damage.
However, health, consumer staples and the energy sector were all positive and played their part in the rise.
The Commonwealth Bank (ASX: CBA) managed to chip out the only big bank rise on Friday – up 0.4% – after it caused plenty of drama for the entire sector after reporting shrinking profit margins during the week.
However, that rise was just a bit of a bounce back after the stock declined by a thumping 9.46% to $97.81 over the past week.
Overall, the banks were down 3.6% for the week, with falling prices for the big miners making an overall rise for the market…