JAMES Packer's Publishing and Broadcasting Ltd will focus on expanding its $9 billion gaming business after splitting into two separate companies later this year, analysts say.
Crown, the new gaming company, will run PBL's casinos in Australia and gambling investments in Asia, North America and Britain. It might be able to raise more than $3.5 billion for acquisitions, UBS AG analyst Nola Hodgson wrote in a note yesterday.
Mr Packer has accelerated PBL's push into gaming since the death of his father, Kerry, 17 months ago. His first casino in Macau opened yesterday, with two more to follow, and he's been buying stakes in gambling venues in Britain, Canada and Las Vegas. The split will allow Mr Packer, Australia's richest man, to focus on Crown, where he will be executive chairman.
"We believe Crown will be even more focused on future transactions as a pure play," Goldman Sachs JBWere analysts Christian Guerra and Adam Alexander said.
Separating Crown and Consolidated Media Holdings was Sydney-based PBL's second major restructure in seven months. In October, Mr Packer sold half of the company's media assets into PBL Media, a venture with buy-out firm CVC Asia Pacific, to raise $4.5 billion to fund his casino expansion as his NineNetwork lost viewers and advertising sales.
Crown would get PBL's "war chest" of $2 billion cash and raise $2 billion in debt to fund a $3-a-share return to investors as part of the split, leaving it with flexibility to add further acquisitions or ventures with international partners, Mr Guerra and Mr Alexander wrote.
"We would expect that Crown will continue to pursue highly leveraged deals," JPMorgan Chase & Co analyst Cameron McKnight said. Crown might also spin off assets into separate investment trusts to free funds for acquisitions and reap management fees, he said.
Crown's shares will be valued at $14.34 and Consolidated Media at $5.07, the average estimate of six analysts shows.
Consolidated Media, which will hold 50 per cent of PBL Media, the owner of Nine and Australia's biggest magazine publisher, as well as stakes in pay TV networks Foxtel and Fox Sports and internet companies, will be run by PBL chief executive John Alexander.
The media business would struggle to expand because it had $3.8 billion in debt and earnings depended on dividends from its investments, Ms Hodgson said.
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