Packer’s Crown Buys Cannery Casino for $1.75 Billion
Crown Ltd., Australian billionaire James Packer’s gaming company, agreed to buy Cannery Casino Resorts LLC for $1.75 billion in cash, doubling its gambling investments in North America.
The acquisition of closely held Cannery will add to earnings per share and be funded with existing cash reserves, Melbourne- based Crown said in a statement today.
The purchase of three casinos in the Las Vegas region and a racetrack in Pittsburgh comes less than two weeks after Packer, Crown’s biggest shareholder and Australia’s richest man, split his media assets into a separate company to focus on the faster growing casino business. The 40-year-old has led more than $3 billion of gaming acquisitions in North America this year, adding to assets in Australia, Macau and the U.K.
“They’ve been looking to expand in the U.S. and this is where they see their opportunity,” said Sean Fenton, who helps manage the equivalent of $832 million at Jenkins Investment Management in Sydney.
Crown shares rose 3 cents to A$13.83 at the 4:10 p.m. close of trading in Sydney. The stock has fallen 2.5 percent since the split of Publishing & Broadcasting Ltd. into Crown and Consolidated Media Holdings on Dec. 4.
The assets being acquired include the Cannery Casino and Hotel in North Las Vegas, Nevada Palace Casino on the Boulder Strip in East Las Vegas and the Meadows Racetrack & Casino in Pittsburgh. Cannery also operates the Rampart Casino in Summerlin, West Las Vegas, under a management contract.
Cannery is also developing the East Side Cannery in East Las Vegas to replace the Nevada Palace Casino and a permanent facility for the Meadows Racetrack, which when completed will give it control of 8,400 slot machines, 75 gaming tables and 720 hotel rooms.
Cannery developed the venues as “locals” casinos, seeking to attract residents of the area rather than tourists. The company is 58 percent owned by founders Bill Paulos and Bill Wortman’s Millennium Gaming Inc., with the rest held by buyout firm Oaktree Capital Management LLC which bought a stake in 2006.
They “have created first-class locals properties located in markets with attractive, long-term growth prospects,” Packer said in the statement. “Crown’s skills and experience in operating successful locals casinos will enable us to grow the Cannery Casino business further.”
Nevada casinos attracted $1.16 billion in revenue in October, up 9.6 percent from the same month in 2006, according to the state’s Gaming Control Board.
Crown’s existing North American investments include a 19.6 percent stake in Fontainebleau Resorts LLC, which is developing a Las Vegas casino, and a half share of Canada’s Gateway Casinos Income Fund.
In May, the company agreed to pay $22.5 million for a 37.5 percent stake in LVTI LLC., which is building the Crown Las Vegas, neighboring the Fontainebleau property.
As well as Melbourne’s Crown casino, Australia’s biggest, the company owns Burswood in Perth and 50 percent of U.K. operator Aspinall’s.
Crown also has a 37.9 percent stake in Melco PBL Entertainment (Macau) Ltd., which opened its first casino in May and is developing others in the former Portuguese colony.
The Cannery acquisition is subject to regulatory approval, which is expected to take at least 12 months, Crown said.
Macquarie Group Ltd. and Global Leisure Partners LLP advised Crown on the deal.
Packer, who inherited Publishing & Broadcasting in December 2005 after the death of his father Kerry, raised A$4.5 billion ($3.9 billion) last year selling the company’s media assets into PBL Media, a joint venture with buyout firm CVC Asia Pacific Ltd.
In June, he sold a further 25 percent stake to CVC. He returned A$2 billion of cash to shareholders through the split, freeing up the remaining cash for acquisitions.
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