Packer May Target U.S. Casino Assets, Citigroup Says
Sept. 8 (Bloomberg) -- Australian billionaire James Packer may seek new U.S. casino acquisitions after raising almost A$900 million ($769 million) selling private assets, according to an analyst at Citigroup Inc.
Consolidated Press Holdings, the Packer family company, is "unlikely" to use the cash to bid for the 64 percent of casino owner Crown Ltd. it doesn't already own, Jenny Owen, a Citigroup analyst in Sydney, said in a note to clients today.
Packer, who turns 42 today, may take advantage of "rock- bottom prices" as U.S. casino operators struggle with high debt and slumping demand amid a recession, Citigroup said. Gambling on the Las Vegas Strip dropped 15 percent in the 12 months ended June, according to the Nevada Gaming Control Board, with falling valuations causing Crown to write down its existing North American assets by A$1.5 billion in the past two years.
"2010 could prove an opportunistic time to buy U.S. casino assets, as the ongoing downturn could be prolonged," wrote Owen, who rates Crown "hold." "Those assets could then be vended into Crown at a later date and a higher multiple."
Anthony Klok, a spokesman for Melbourne-based Crown, didn't return a voicemail left by Bloomberg News seeking comment on the report today.
Crown shares rose 3.1 percent to A$8.25 at the 4:10 p.m. close of trading in Sydney. The stock has gained 38 percent this year and has a market value of A$6.3 billion.
"Crown is not cheap at current levels," said Owen.
Packer raised A$396 million last week selling his 21 percent stake in investment manager Challenger Financial Services Group. Packer and Consolidated Press' Ashok Jacob today resigned from the board of Sydney-based Challenger.
Packer's Sales
Other Packer sales this year include a Sydney office building for A$50 million and the family's Australian cattle ranches to U.K. buyout firm Terra Firma Capital Partners Ltd. for about A$425 million.
He may also dispose of his 12 percent holding on property company Sunland Group for A$25 million, the Australian newspaper reported yesterday, without citing anyone.
Crown has been involved in about $3 billion of North American gambling purchases since 2006, buying stakes in Cannery Casino Resorts LLC, Stations Casinos, Harrah's Entertainment Inc, Canada's Gateway Casino Income Fund and Fontainebleau Resorts LLC.
The U.S. gambling slump has led to about A$1.5 billion in charges against those investments with Stations and a unit of Fontainebleau in Chapter 11 bankruptcy while Harrah's Entertainment Inc. offers bondholders new notes with later maturities to cut borrowings.
Crown Chief Executive Officer Rowen Craigie last month described the U.S. expansion as "ill-timed."
"More distress for the U.S. gaming names could create good buying," said Owen. "If there are great buying opportunities opening up now, why share the gains with Crown shareholders."
Crown and Consolidated Media Holdings Ltd. were created in 2007 when James Packer split his gambling and media assets into separate companies, two years after inheriting them upon the death of his father, Kerry.
Packer holds a 41 percent stake in Consolidated, which last month raised A$441 selling its stake in Seek Ltd., Australia's largest employment Web site.
