Private equity company Blackstone Group Inc (BX.N) bought a near 10% stake in Australian casino operator Crown Resorts Ltd (CWN.AX) from Macau’s Melco Resorts & Entertainment Ltd (MLCO.O), sending Crown shares soaring amid hopes of a buyout.
The deal accomplishes Melco’s plan to exit its Crown holdings as casino companies around the world rein in spending to cope with a shutdown to slow the spread of the coronavirus. Crown disclosed the deal in a market filing on Wednesday.
Blackstone’s purchase makes the private equity investor the second-largest holder in Crown after the company’s billionaire founder James Packer. The investment has stoked speculation that Blackstone, with $570 billion assets under management, may lob a bid for more or all of the Australian company.
Packer had planned to sell more of his 37% stake in Crown to Melco as part of a broader retreat from the business, but that deal encountered regulatory hurdles even before the coronavirus shutdown largely halted both companies’ operations.
Shares of Crown jumped as much as 12.3% to their highest since March 6 and were up 10% against a 1% gain on the benchmark ASX200 index.
“The sale has certainly stoked the fire of perceived corporate activity in Crown,” said James McGlew, executive director of corporate stockbroking at Argonaut.
“Hard to say if (a takeover) is imminent but as with big game hunting, it’s easier to track prey when it is weakened. COVID-19 has certainly done this to the casino and resort sector,” McGlew added, using the name for the respiratory illness caused by the new coronavirus.