Crown Resorts has formally rejected a takeover offer from one of its potential suitors.

The Australian Financial Review reports that Blackstone’s takeover offer, valued at $8.3 billion, has been rejected, but The Star’s merger proposal remains in play.

The James Packer-backed casino operator told the ASX that the US private equity firm’s revised offer of $12.35 a share, up from the initial offer of $11.85, still “undervalued” the company and was “not in the best interests of shareholders”.

Stock in the company edged up 0.28 per cent $13.07 in mid-morning trade on Monday.

The rejection of the Blackstone offer came moments before public hearings commenced at Victoria’s royal commission into Crown’s suitability to hold a licence at its Melbourne casino on Monday morning.

The Victorian probe was sparked by the NSW Bergin inquiry, which found the company unfit to open its $2.2 billion Barangaroo casino because the company facilitated the laundering of hundreds of millions of dollars linked up with Asian triads via its high roller junket program.

The Crown board, led by executive chairman Helen Coonan, concluded Blackstone’s offer was inadequate after taking “considered feedback from shareholders” and advice from financial and legal advisers.

The board also said it believed Blackstone faced significant uncertainty as to the timing and outcome of the regulatory approval processes.

Crown said Blackstone’s revised proposal “as currently understood presented an unacceptable level of regulatory uncertainty for Crown shareholders.”

The decision comes days after Perpetual’s head of equities urged Crown to open its data room to kick off the formal sale process on Thursday.

Perpetual holds eight per cent of the company.

Crown Board cools off Blackstone takeover talks

Mr Packer, who has not made public comments on the takeover or merger proposals, holds 37 per cent of Crown’s stock.

But the “board unanimously concluded that the Revised Proposal undervalues Crown and is not in the best interests of Crown’s shareholders”, the company said.

“The board has had regard to discussions with Blackstone and various legal authorities. The board has considered feedback from shareholders.”

Blackstone’s timeline for gaining regulatory approval from the NSW gaming regulator also played into the board’s decision to reject the offer.

“Despite Blackstone’s modification of these conditions, the board believes there is significant uncertainty as to the timing and outcome of the regulatory approval processes.

“As a result, the conditions of the revised proposal as currently understood present an unacceptable level of regulatory uncertainty for Crown shareholders,” the company said.

Separately, Crown Resorts also told the market it was still assessing The Star merger proposal and “has requested Star to provide certain information to allow the Crown Board to better understand various preliminary matters.”

The company advised shareholders it did not need to take any action in relation to the merger proposal at this stage because “there is no certainty that the merger proposal will result in a transaction.”

In mid-April, investment company Oaktree proposed to takeover Crown, with details of an investment funding of nearly $3 billion to Crown in order to buy back “some or all” of the shares held by CPH.

Oaktree would “provide a funding commitment of up to A$3 billion to Crown via a structured instrument, with the proceeds to be used by Crown to buy back some or all of the Crown shares, which are held by CPH on a selective basis.”

CPH holds a share ownership in Crown of about 37 per cent, making Mr Packer the largest investor in the nation’s largest gaming group.

Mr Packer’s influence over the Crown board as majority shareholder has been scrutinised by a NSW probe into the casino that determined the company was not suitable to hold a gaming licence in the state because of evidence of mismanagement and money laundering.

Findings from the NSW Independent Liquor and Gaming Authority inquiry also found Mr Packer was not a suitable person to be associated with the casino.

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