Date: May 03 2012
Billionaire James Packer has hired UBS to sell his 25 per cent stake in pay TV operator Foxtel, worth about $1 billion, raising speculation he may bid for casino group Echo Entertainment and its prize asset, Sydney's Star casino.
Mr Packer, who has stakes in casinos in Australia, London, Macau and Las Vegas, has mandated UBS to sell his 50.1 per cent holding in Consolidated Media Holdings, which holds the Foxtel stake as well as content-provider Fox Sports, a source with direct knowledge of the situation said today.
The move has renewed talk that Mr Packer may look to add Echo, which has a market capitalisation of $3 billion, to Crown, the Packer-run owner of Melbourne's Crown casino and Perth's Burswood casino, to create a $10 billion gaming giant.
Selling the Foxtel stake would allow Mr Packer to hold 40-45 per cent of a merged Crown/Echo entity and would anchor his Asian and global gaming ambitions, maximising growth in the high-roller business from Asia, the Herald-Sun newspaper said today.
Crown has already applied to Australia's gaming authority to raise its stake in Echo above 10 per cent after hitting that limit in February.
"These are monopoly assets, there is only one casino (operator) in each state. They are much better assets (than Foxtel) from that perspective, and the returns are arguably better," said Karara Capital portfolio manager Akshay Chopra.
"If he were to take over Echo it would be a big price," he added, saying Mr Packer could choose to expand further in Asia instead.
Echo was voted Australia's No. 1 contender to be taken over in 2012 by JPMorgan, which said in January that Crown would need to act quickly before recent spending on Star flowed through to its bottom line.
Both CMH and a UBS spokeswoman in Sydney declined to comment.
UBS joint global head of investment banking, Matthew Grounds, sold Mr Packer's Nine Network TV asset in 2006 for $4.5 billion.
CMH shares were flat at $3.30 a share today. Packer wants $3.60 a share, the Herald Sun said.
Rupert Murdoch's News Corp, which owns 25 per cent of Foxtel, would likely have first rights to buy the Packer interest, the paper said, while Seven West Media, controlled by billionaire Kerry Stokes, may also be interested.
Seven could not be reached for comment.
The Herald Sun, owned by Rupert Murdoch's News Corp, said if granted foreign ownership approval "News Corp could move to control literally overnight".
"He has to sell to Murdoch. That's the only way to bring certainty and pretty quick finality," the paper said.
Telecommunications company Telstra, which holds the remaining 50 per cent of Foxtel, has said it wants to up its 50 pe rcent stake but may face competition hurdles.
Shares in Telstra rose 0.3 per cent, Crown fell 0.9 per cent, Echo added 2.2 per cent, News Corp firmed 0.1 per cent and Seven West lost 0.7 per cent.
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