SYDNEY (Reuters) - Buyout giant Blackstone Group Inc made a $5.6 billion play for the shares of Australia’s Crown Resorts Ltd it does not already own, weeks after the casino operator was deemed by authorities to be unfit to hold a gaming licence in Sydney. The informal offer, which Crown disclosed early Monday and Blackstone later confirmed, sent Crown shares up a fifth as investors wagered a higher price could be in the offing from the world’s No. 1 private equity firm or another suitor. “It’s nice to get a bid, and now it’s about price discovery,” said John Ayoub, a portfolio manager at Wilson Asset Management, which has Crown shares. “These stocks are trading at trough earnings and I wouldn’t be surprised to see further activity in the sector.” If Blackstone were to succeed, it would get a company in crisis after New South Wales state regulators last year accused it of money laundering and links to organised crime. The inquiry led to the loss of its licence to operate its new flagship casino, a A$2.2 billion ($1.7 billion) development on Sydney’s waterfront. The scandal also triggered powerful independent quasi- judicial inquiries in the other two Australian states where Crown is licensed to operate. Both of those inquiries are yet to begin. Australia’s financial crimes agency is also investigating Crown over money-laundering allegations, and the company faces two shareholder class actions accusing it of failing to notify them of risks which later led to share price declines. Though the Blackstone indicative offer of A$11.85 was a 20% premium to latest close, it was short of the stock’s A$11.90 closing price on Feb. 20 last year. The proposal values Crown at $6.2 billion. Crown shares were up 21% at A$11.95 at 0330 GMT, slightly higher than Blackstone’s proposed price. “Blackstone couldn’t get away with a price like this if the casinos weren’t being affected by COVID and the management issues at the same time,” said Nathan Bell, portfolio manager of Intelligent Investor, which has Crown shares. “It’s only an opening bid. It’s a messy situation and offering to acquire a casino is a complex affair at the best of times due to all the regulation.” A spokesman for company founder James Packer, Crown’s top shareholder with about 36% of its shares, declined to comment. The company’s third-largest shareholder, Perpetual Equity Investment Co Ltd, also declined to comment. Blackstone, Crown’s second-largest shareholder with 9.99%, confirmed the approach but declined to comment further. BAD TO WORSE Packer sold out of casinos in Macau and the United States and began a series of attempts to take Crown private after 18 staff were jailed in China in 2016 for violating anti-gambling laws. Three years later media reports in Australia accused Crown of knowingly doing business with junket - or gambling tour - operators linked to organised crime, leading to shocking revelations of bad governance at the subsequent inquiry. Its new tourist-targeted Sydney casino opened in December without tourists due to pandemic-related border closures, and without gambling because of restrictions put on it during the regulatory probe. It has lost about half its board including its CEO since the inquiry declared Crown unfit for a Sydney licence in February. Among the conditions of the Blackstone proposal, the private equity firm itself would need to be found suitable to run a casino by Crown’s regulators. The New South Wales state Independent Liquor and Gaming Authority said it was aware of the approach but declined to comment further. Crown said its board had not yet formed a view on the proposal, but it would talk to “relevant stakeholders including regulatory authorities”. Shares of Crown rival Star Entertainment Group rose 4% against a relatively flat overall market, a sign of expected M&A interest in the sector. ($1 = 1.2953 Australian dollars)