Billionaire Packer in Talks to Take Crown Assets Private

Opening Of Melco Crown Entertainment Ltd.'s Studio City Casino Resort

James Packer.

Photographer: Justin Chin/Bloomberg
  • Billionaire in talks to return some casinos to private hands
  • Packer speaks with PE firms, pension funds on possible bid

James Packer, Australia’s third-richest man, is in talks to return some of Crown Resorts Ltd.’s casino assets to private ownership, people with knowledge of the matter said. Crown Resorts shares surged the most in almost seven years.

Packer’s Consolidated Press Holdings Pty has been speaking with private equity firms and pension funds about a possible joint bid for some assets of his publicly traded Crown Resorts, which has a market value of A$8.6 billion ($6.2 billion), according to the people. A deal hasn’t been finalized, and the talks may still fall through, the people said, asking not to be identified because the information is private.

Shares of Crown Resorts, which runs casinos in Melbourne and Perth, have fallen 33 percent from a February high in Sydney trading through Tuesday. The company’s resorts in the southern Chinese territory of Macau, which it operates through the Melco Crown Entertainment Ltd. joint venture, have been hurt by government curbs on illicit money flows and a campaign against corruption that deterred VIP players. 

“Macau has been a massive issue. Melco Crown has been part of the reason Crown has suffered so badly,” Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone Wednesday. “He’s risk-mitigating the current situation. It’s an interesting move and clearly the market likes it.”

Cutting Costs

Teaming up with private equity firms would help Packer strip out costs and ride out the tougher periods away from the glare of public markets, Lucas said. 

Crown shares rose 11 percent, the biggest gain since March 2009, to close at A$11.77 in Sydney on Wednesday.

Consolidated Press, Packer’s closely held investment vehicle, owns a controlling stake in Melbourne-based Crown Resorts, according to data compiled by Bloomberg. The billionaire stepped down as chairman of Crown Resorts in August to focus on developing the company’s new projects, which include a casino under development in Las Vegas and a hotel for high rollers on the Sydney harbor. Packer remains a director of the company.

New Casino

The company’s Macau venture, which is part-owned by billionaire Lawrence Ho, in October opened the Hollywood-themed $3.2 billion Studio City resort that features a giant Ferris wheel and virtual Batman ride. In October, Crown Resorts bought a 20 percent stake in the Nobu restaurant and hotel chain for $100 million.

Consolidated Press did not respond to an e-mail seeking comment. Crown Resorts Chief Financial Officer Ken Barton didn’t immediately respond to an e-mail and a message left at his office seeking comment.

Consolidated Press has been tightening its grip on Crown in recent weeks. According to a November filing, it bought about 22 million more shares to take its stake to 53 percent.

Crown’s profit in the 12 months ended June slumped 41 percent to A$385 million, dragged down by slimmer contributions from Macau, which has seen casino revenue falling for the 18th straight month in November.

In Sydney, Crown is building a luxury hotel and gaming resort at Barangaroo near the Sydney Harbour Bridge in a bid to attract the world’s richest travelers and gamblers. Crown has said it expects to spend about A$657 million on the project in the next
three years.

Days before Studio City opened, Crown said any focus on the slowdown in Macau was “short sighted” and the company had “great faith in its long-term development.”

Bashed by investor concerns over Macau, Crown shares are now undervalued, said Brian Han, an analyst at Morningstar Inc. in Sydney. Any plan by Packer to buy them back would have “economic logic,” he said.

“We are long-term believers,” Han said by phone. “Macau will be a big and very sustainable mass market. Right now, it’s dominated by VIPS -- and we all know why they’re not gambling these days. They just don’t want any attention.”

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