Crown Ltd., the casino company controlled by billionaire James Packer, hired UBS AG to sell its 10 percent stake in rival Echo Entertainment Group Ltd., according to three people familiar with the situation.
UBS underwrote the sale of about 82.6 million shares owned by Crown and was marketing them at a fixed price of A$3.20 a share, two of the people said, speaking anonymously as the transaction wasn’t complete. That’s a 7 percent discount to Echo’s close today of A$3.44 a share, and values the stake at A$264 million ($256 million).
Crown and Echo submitted rival plans to the New South Wales state government to invest in casinos on the shores of Sydney Harbor to attract high-spending Asian gamblers to Australia’s largest city, with the government yet to decide which proposal it will allow to proceed. Packer on May 16 unveiled designs for a A$1 billion tower concept by Wilkinson Eyre Architects, who worked on Singapore’s Gardens by the Bay.
Packer and Karl Bitar, a spokesman for Melbourne-based Crown, didn’t immediately respond to an e-mail seeking comment. Peter Brookes, an external spokesman for Echo at Citadel Communications, declined to comment. The transaction was first reported by the Australian Financial Review newspaper.
Crown first took an interest in Echo last February through a derivative transaction arranged by Deutsche Bank AG. It paid about A$254 million to the bank on completion of the transaction, giving it control of the stake the following month.
Crown rose 0.8 percent to A$13.06 in Sydney trading today and has climbed 22 percent this year, beating the 8.9 percent gain of the S&P/ASX 200 Index. Echo is unchanged this year at A$3.44.
Packer initially sought changes to Echo’s management and discussed having his planned tower at the Barangaroo development site west of Sydney’s main business district covered by an exclusive casino license held by the company.
He’s disparaged the performance of Echo’s Star casino since New South Wales state last October agreed to study his plans to build his casino under a separate license.
Crown this month won approval from state gaming regulators to lift its stake in Echo beyond the current 10 percent level to 23 percent. Genting Hong Kong Ltd., the cruise ship company controlled by Lim Kok Thay, in October also applied to raise its stake in Echo to 25 percent.
Echo plans to spend an unspecified amount upgrading its Star casino, which sits on an adjacent stretch of shore to the Barangaroo site, and has sought an extension to a New South Wales license that prevents other casinos operating in the state until 2019.
Echo’s former owner, Tabcorp Holdings Ltd., paid A$100 million to the state government in 2007 in return for the exclusive rights.