Packer on cusp of ending family’s 23-year rocky affair with Crown

That meant Packer, the loyal offsiders at his private company Consolidated Press Holdings (CPH), and their adviser Moelis, found out about the new offer at the same time as everyone else.

Nevertheless, Packer’s team was quick to indicate tentative support in a lunchtime statement which said it was “encouraged by today’s announcement”.

A sale would end the Packer family’s 23-year association with Crown, which kicked off with Kerry Packer announcing plans to acquire the original Melbourne casino in December 1998.

James Packer’s determination to make a cathartic exit from the casino operator — which has dominated his professional and private life since Crown staff were arrested by Chinese authorities in 2016 — is no surprise.

Just three years ago the billionaire scion himself was trying to negotiate a takeover of Crown, first with Las Vegas giant Wynn, and then an ill-fated sale to Lawrence Ho of Hong Kong’s Melco Resorts.

That was before a series of reports by The Age, The Sydney Morning Herald and 60 Minutes into Crown’s affairs in July 2019 triggered inquiries which led to Crown being deemed unsuitable to hold its casino licences in Sydney and Melbourne which sent the share price below $9 last year.

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It has been a long slog getting the share price back above $13, which was Packer’s agreed selling price to Melco. But Crown’s new regime has acted quickly.

Switkowski only formally joined Crown as chairman on December 1. He was brought in to steady the ship alongside a small crew of new directors after two years of rolling scandals and regulatory scrutiny triggered a total clean out of Crown’s board and senior management.

Crown deemed Blackstone’s early December bid of $12.50 as too cheap, but it was enough to offer Blackstone limited access to its books in the hope that would encourage it to go higher.

With Blackstone stalking Crown for the best part of a year, one source close to the board said it had enough feedback from shareholders about what they would accept for their shares and had “war-gamed out” enough scenarios to be able to respond quickly.

The board believes Crown shares (which closed at $11.63 on Wednesday) will certainly be worth more than $13.10 when it recovers from its regulatory woes, and tourism bounces from the pandemic. “But not within a year” and not without risk, the source said, making Blackstone’s cash the best option for investors.

Crown’s endorsement of the deal wasn’t strictly necessary, either. But two other sources with knowledge of the events said that after knocking back Blackstone three times since March 2021, the suitor wanted a public vote of confidence from Crown if it put another $400 million on the table (which is a raise of $840 million from its opening offer).

Blackstone’s takeover would need approval from NSW, Victoria and WA’s gambling regulators, and has a head start after applying for probity clearance almost a year ago.

Its pitch to Crown is to have cash in investors’ hands by the end of June – before any rival can start its own regulatory approval process – and while The Star Entertainment Group, Crown’s Sydney-based competitor and merger hopeful, is mired in its own probity scandal.

For those wondering what the future looks like for Packer, if he gets his $3 billion-plus payday and finally cuts loose from the casino operator, it probably is not that much different from his life right now.

With the exit of his key lieutenants from the Crown board in February last year, after the NSW casino regulator found it unfit to hold the Barangaroo licence, Crown has effectively been just another investment in the CPH portfolio.

“During the year the company continued to seek appropriate investments,” said the private company’s most recent financial report lodged with ASIC.

The accounts reported financial assets totalling more than $8.7 billion at a time when his Crown stake would have been worth well below $3 billion.

CPH has been focused back on Packer’s first love: Tech investing.

“Tech has always been James’ interest,” said one close associate.

The One.Tel failure may loom large on his CV, but the truth is Packer has been an astute investor on this front dating back to his investments in Seek and Carsales.com.au and Zillow (now held by Gretel Packer) in what was an astute bet on the migration of print classified ads to online platforms.

He has also remained close to Seek co-founder Paul Bassat.

CPH was an early investor in Bassat’s venture capital firm Square Peg Capital which has backed the incredibly successful graphic design startup Canva, fintech Airwallex, and Israeli freelance services marketplace Fiverr.

As for Packer personally, untethering his fortunes from the business that has caused him so much anguish is not expected to change his personal life much either. “I feel that, mentally, he is in a much better space, which is wonderful,” said his mum, Ros Packer, during a tour of the Barangaroo work site in January 2020.

“It shattered him, with the employees in jail in China, it shattered all of us.”

And while the $72 million two-storey apartment he acquired last month, atop Crown Barangaroo, gives him a home in Australia, insiders say he is unlikely to spend much time this side of the Pacific Ocean.

With Packer’s former wife, Erica, and three children residing in Los Angeles, the billionaire is expected to remain largely within his golden triangle of Los Angeles, Aspen, and the soon-to-be-completed mansion in Cabo San Lucas, Mexico.

It might just be enough that Packer feels his legacy in Australia is complete with the opening of Barangaroo as he hinted back in 2020 during that same site visit.

“I just hope it’s something special that Sydney really loves.”