The Crown Resorts Ltd (ASX: CWN) share price is rising after getting more takeover bids.
Crown share price rises on takeover bids
It was revealed this morning that Crown has received a conditional, non-binding and indicative proposal from rival Star Entertainment Group Ltd (ASX: SGR).
There are two different ideas with the Star acquisition. One proposal is a nil-premium all-share takeover deal of 2.68 Star shares for each Crown. The share exchange ratio reflects the ratio implied by the 3-month volume-weighted average share exchange ratio to 19 March 2021 (the last day before the Blackstone acquisition news).
But there’s also a cash alternative of $12.50 per Crown share, subject to a cap of 25% of Crown’s total shares on issue, with any reduction occurring on a pro rata basis.
Assuming the cash alternative is fully taken up, it would result in calculated ownership of the merged entity of 59% for Crown shareholders and 41% for Star shareholders. The initial combined entity board would comprise of the existing boards.
Star has estimated that a merger would result in cost synergies of between $150 million to $200 million per annum.
Crown’s board has not yet decided if this proposal is worth pursuing or not, but it is assessing the value and terms of the deal.
Another takeover bid from Blackstone
Not wanting to be left behind, Blackstone has decided to increase its bid by $0.50 per share to $12.35 per share. That represents an increase of 4% compared to the last bid of $11.85 per share. Other than the price increase, the offer is essentially the same as the first offer.
Crown’s board has also not yet formed a view on the merits of the revised proposal.
Summary thoughts on the Crown share price
The Crown share price has risen around 6% to just over $12.85 at the time of writing. Investors may expecting further bids.
It’s now ahead of where it was just before the COVID-19 crash. I wouldn’t call it a buy today, but there could be a bidding war. It’s hard to know what the final price that the bidders will go to. So you’ll have to decide if you want to hold in the hopes of a higher price, or sell now and look for other ASX growth shares.
