Packer runs eye over US casino chain, by Vanda Carson - The Sydney Morning Herald - 10th July 2008
James Packer is reported to be eyeing a $US2.4 billion ($2.5 billion) chain of US casinos which spreads across six states, a move which would instantly triple his presence in the American market.
According to a note to clients of broker UBS, which cites a US gambling industry journal, Crown is a likely bidder for takeover target Ameristar Casino as its collection of eight casinos is considered a perfect fit for Crown's growing collection.
Mr Packer is executive chairman of Crown, the gambling group which emerged from Publishing and Broadcasting as part of the split-up of the company late last year.
He has rapidly created a global casino empire since he freed up cash in the demerger.
Shares of Ameristar, which have been trading at record lows, have risen in recent days on speculation of an imminent bid.
More than half of the company is owned by the family of the late chief executive, Craig Nielsen, who died two years ago.
UBS gambling analyst Sam Theodore said Crown had the financial strength to add more US casinos to its portfolio.
He said Crown could buy the company through a joint venture with a financial partner. If Crown wanted to go it alone, it would have to sell some of its valuable Australian properties, possibly by rolling them into a property trust.
In December Crown announced the purchase of three casinos on the outskirts of Las Vegas, and a racetrack-casino on the other side of the US in Pittsburgh, Pennsylvania.
However the company does not have to hand over the $1.8 billion until later this year when regulators are expected to give the green light to the deal.
Gaming companies worldwide, including Crown, have been hit by recession worries, with half a dozen of the top US companies trading at record lows, but some observers believe it is an opportunity to increase market share through consolidation.
Most of Ameristar's casinos are in the Midwest, with two in Missouri and one each in Illinois, Iowa and Mississippi. It also has two casinos on the border of Nevada, in the aptly named town of Jackpot, and one in Colorado.
They are similar to Crown's existing US casinos as they also cater to local residents and are downmarket compared with the flashy, big-name resorts on the famed Las Vegas Strip.
Crown pulled the plug on a plan to take part in the development of a $5.2 billion casino on the Strip last month after financiers failed to support the deal.
In Macau, Crown has preferred to focus on the other extreme, luring VIP gamblers to its private, luxurious gaming rooms.
UBS has valued Crown at $9.4 billion, including $7 billion for the Melbourne and Burswood casinos, and $1.5 billion for its 37 per cent stake of the Macau venture Melco Crown Entertainment.
Crown declined to comment yesterday. Its shares2c lower at $8.60 yesterday.
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