PACKER WALKS AWAY FROM ECHO
Written on the 24 May 2013
ANY ambitions James Packer may have had of taking over Echo Entertainment Group Ltd (ASX: EGP) have been emphatically dumped after the casino mogul’s Crown group sold its stake in the Gold Coast casino operator overnight.
Crown Ltd (ASX: CWN) announced to the market this morning that it had sold its entire stake in Echo for $264 million.
Crown says it offloaded its 10 per cent stake of 82.5 million shares in a block trade at $3.20 each, or at a 7 per cent discount to Echo’s last closing price.
Echo’s shares this morning slumped more than 13 per cent on the news, falling as much as 45c to trade around $3 immediately after opening on the Australian Securities Exchange.
Crown’s share shot up by 20c to $13.26.
The exit by Crown has surprised the market after the company earlier this month gained approval by the New South Wales gaming regulator to lift its 10 per cent in Echo to 23 per cent.
Packer’s Crown and Echo have been going head to head in a battle for control of the Sydney casino market with Packer lobbying the NSW Government to approve a proposed $1 billion six-star hotel-casino at Barangaroo.
Echo’s exclusive licence to operate Sydney’s sole casino expires in 2019 and Packer’s previous tilt at Echo has been seen as a strategic move to secure a foothold should his plans for Barangaroo fail.
Echo operates The Star in Sydney as well as the Gold Coast’s Jupiters Casino and Brisbane’s Treasury, while Crown operates the Melbourne and Perth casinos.
A move on Echo also was seen as a strategic play by Packer to get a foothold in the Queensland market.
But the Echo share sale is described by some sources as a sign of confidence that Packer will get the approvals he needs to fulfil his dream of developing a landmark VIP casino overlooking Sydney Harbour.
But in a statement, Crown says the sale is essential so that the company can “pursue the Crown Sydney Hotel Resort without speculation surrounding its Echo shareholding”.
“Crown Sydney is a once in a life time project for our company,” says Packer, the chairman of Crown.
“Our objective and our ambition is to build the world’s best six-star hotel resort on Sydney Harbour. We are working as hard as we can to make this goal a reality.
“Crown’s resorts have helped transform Melbourne and Perth for the better and are part of the fabric of those cities.
“The Crown Sydney Hotel Resort will create jobs, investment and taxation revenue for NSW and help Sydney compete with other global destinations for international tourists.”