Crown kills deal with Cannery

A $1.75 billion deal by Australia’s Crown Ltd. to buy Las Vegas-based Cannery Casino Resorts collapsed today when the buyer couldn’t meet certain conditions in time to close the transaction.

The Australian company, which is controlled by billionaire James Packer, planned to buy the two Cannery casinos in North Las Vegas and on the Boulder Highway, the Rampart Casino near Summerlin, and the Meadows Race Track and Casino near Pittsburgh. The deal had been pending since December 2007.

In a statement released by Crown, the company paid Cannery Resorts a termination fee of $50 million today. However, Crown still wants to acquire Cannery but will go through a multilevel process to complete the transaction, which could take up to two years.

“Today’s announcement puts Cannery Casino Resorts in an enviable position in the gaming industry with a strong balance sheet, ample liquidity, exciting new properties in Nevada and Pennsylvania, great growth opportunities and more certainty for our employees. (The company) will continue its tradition of excellence in serving local customers in Nevada and Pennsylvania with the highest value gaming experience,” said Cannery Casinos Resorts CEO Bill Paulos.

Initially, Crown will pay $370 million to acquire 24.5 percent of Cannery Resorts and up to 60 days to gain regulatory approval in Nevada and Pennsylvania. Cannery Resorts can agree to extend the time period to 90 days.If the deal falls apart again, Crown will pay an additional termination fee of $200 million.

If the purchase is completed, Crown has two years to buy the remaining interest in Cannery for $1.4 billion under the terms of the original agreement.

“Crown considers these new arrangements represent a satisfactory outcome for its shareholders,” the company said in a statement. “Crown is looking forward to working cooperatively with the Cannery team to continue to grow the business including the launch of the new Meadows permanent casino in Pittsburgh which is due to open in April.”

The demise of the Cannery purchase had been rumored for several months.

Nevada gaming regulators approved the original buyout transaction in January. But the matter was held up in Pennsylvania. Packer’s sister and three investors asked the Pennsylvania Gaming Control Board to withdraw their names from the license application because they wanted to main to maintain their privacy on several issues.

At the time, Crown released a statement saying the casino company was “committed to the Cannery acquisition” and was working with Pennsylvania regulators to resolve any application issues.

Bill Paulos, a co-owner of Cannery Casino Resorts, said at the time he expected Crown would “be licensed (in Pennsylvania) towards the end of March.”

Crown operates casinos in Australia and Macau.