Wall Street buyout fund Apollo Global Management is mulling sweetening its $2.5 billion (C$3.3 billion) takeover offer for Canadian casino operator Great Canadian Gaming, Bloomberg reported citing people familiar with the matter.
It is also understood that Apollo could walk away from the proposed transaction, if it fails to win approval from Great Canadian’s shareholders during a December 23 meeting.
The private equity firm first approached the casino company in August. During negotiations, Apollo said that it was considering an offer between C$38 and C$41 per share. It eventually tabled a C$39-a-share bid.
The private equity fund’s offer quickly faced massive opposition from Great Canadian shareholders who complained it was too low, particularly given the fact that the casino operator controls gambling venues in the Greater Toronto Area.
Apollo is understood to be contemplating its approach and possibly upping its bid. People familiar with the matter told Bloomberg that a revised offer would likely still be within the C$38-C$41-a-share range.
Great Canadian operates 26 properties around Canada. Of these, 19 are currently shut temporarily as Canada grapples with containing a surge in Covid-19 cases.
Apollo Ready to Walk Away from Deal
Sources told Bloomberg that while Apollo may end up increasing its bid, it is not willing to overpay for Great Canadian because of the turbulences experienced by the casino industry during the pandemic and the future risks the crisis poses to the sector.
Apollo has not commented on the recent reports about its takeover bid for the Canadian casino operator.
Great Canadian’s board approved the deal, saying that it would immediately deliver significant shareholder value despite the negative effects of the worst health crisis the world has seen in many years.
Company shareholders are set to vote on the transaction at a December 23 meeting. Apollo is expected to walk away from the deal if it does not win approval from investors rather than overpaying.
Some of Great Canadian’s shareholders hit at Apollo’s offer saying that it undervalued the company and tried to take advantage of the drop in its share price since the pandemic shook its operations around Canada.
If the private equity firm chooses not to make an offer that pleases investors, this would be its second failed attempt to acquire a big gambling company in recent months. It was in August again when Apollo approached British bookmaker William Hill with an informal takeover offer.
US casino giant Caesars Entertainment tabled a rival bid that William Hill accepted. Apollo said last month that it was no longer interested in bidding for the gambling company, but could make an offer for its non-US operations, which Caesars intends to sell when it finalizes the takeover.