Crown offloads $264m stake in Echo
James Packer's Crown Limited has offloaded its 10 per cent stake in rival Echo Entertainment, in a clear signal it is confident of gaining approval for its own casino in Sydney.
The sale of the stake to institutional investors in a bookbuild late on Thursday was priced at $3.20 a share, a 7 per cent discount on Echo's closing price of $3.44 on Thursday. It values Crown's stake at $264 million.
The sale of Crown's stake in Echo suggests Mr Packer is confident he will gain final approval from the NSW government to build a $1 billion resort-casino at Barangaroo, in Sydney.
Crown has been locked in a battle for government approval with Echo, which has made a counter-proposal to expand its casino at Pyrmont, in Sydney, and extend its exclusive casino licence beyond November 2019.
NSW Premier Barry O'Farrell has said only one can proceed because Crown's proposal relies on the government granting it a second Sydney casino licence after 2019.
A panel headed by former banker David Murray will advise the government which project to back "as soon as possible" after the proposal deadline of June 21.
Crown's stake in Echo was viewed as an insurance policy that would be a foothold in the Sydney market for Crown if the government rejected its Barangaroo proposal.
The sale comes less than two weeks after Crown received approval from NSW's Independent Liquor and Gaming Authority to increase its stake in Echo
from 10 per cent to 23 per cent.
The share sale ends a tumultuous time for Echo which faced the prospect of a hostile investor.
Mr Packer last year engaged in an aggressive campaign for a seat on the Echo board with a view to controlling the company's exclusive Sydney casino licence. He planned to use the licence to run a VIP-only high-roller casino in his proposed $1 billion hotel at Barangaroo.
But, after the NSW government indicated that would not be possible, Crown lodged an unsolicited proposal for a second Sydney casino licence after Echo's exclusivity arrangement expires in 2019.
Mr Packer last week unveiled the design for Crown's 60-storey Barangaroo proposal, which includes up to 80 luxury apartments.
But the proposal, which at about 250 metres exceeds height limits of 170 metres for a hotel on the site, has not received state government approval.