Investment giant Oaktree has now entered the Crown Resorts (CWN) affray after offering to buy out James Packers 37% holding in the casino operator. The scenarios are relatively straightforward in our opinion:
1 – US based Blackstone has bid $11.85 for CWN, arguably opportunistic but still an almost 20% premium to where the stock was trading previously – clearly a serious bid as they already own 9.99% of CWN.
2 – CWN is dealing with the regulator (s) to get a clean bill of health for its casinos and a vehicle without Mr Packer is likely to have a far higher chance of success in our opinion.
3 – After Oaktree has thrown its hat into the ring, apparently offering to buy out Packer for $12 per share, notably above Blackstone’s bid, a floor now appears beneath the stock.
It seems Oaktree believes Crown is worth significantly more than $12 with regulatory approval and as we said a share register minus Packer it appears far more likely to get the green light. MM believes the addition of Oaktree to the mix should create a floor below the stock for the months ahead with an increased offer from a new suitor or Blackstone towards $13 a strong possibility i.e. a rare opportunity with upside but limited downside in our opinion.
MM remains bullish around $12
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