By Miriam Steffens, Bloomberg
Sydney: James Packer’s Publishing & Broadcasting Ltd., Australia’s largest casino and media owner, plans to split into two companies and pay $1.7 billion (Rs6,925 crore) to shareholders to boost returns.
Investors will receive one share in the new companies and A$3 cash for each Publishing and Broadcasting share, the Sydney-based company said. Packer, Australia’s richest man, will remain the largest shareholder in Consolidated Media Holdings, the nation’s biggest TV network operator and the gaming unit, Crown.
The split may help bring the market value of Publishing and Broadcasting’s gaming assets in line with those of Las Vegas Sands Co. and MGM Mirage., the world’s biggest casino operators. It will allow management to run the businesses separately, giving investors a choice of betting on the gaming or media industries.
“They have a nice collection of gaming assets and it will interesting to see how the market values that,” said Paul Xiradis, who manages about $8.3 billion in Australian stocks at Ausbil Dexia Ltd. in Sydney. “Clearly unraveling and improving the assets’ value is positive.”
The three biggest gaming companies in the US by market value, Las Vegas Sands, MGM Mirage and Harrah’s Entertainment Inc., sell on average of 35.6 times estimated earnings, compared with Publishing and Broadcasting’s multiple of 25.2 times earnings.
Shares of Publishing and Broadcasting rose A$1.30, or by6.3%, to A$22.03, the biggest gain since April 2001. They have advanced by 3.1% this year, falling short of the 11.1% rise of the nation’s benchmark index.
Crown will own Publishing and Broadcasting’s Crown casino in Melbourne, Australia’s biggest gaming house, Burswood in Perth and international gaming assets including a 41.4% stake in Melco PBL Entertainment Ltd., Packer’s joint venture in Macau with billionaire Stanley Ho’s son Lawrence. The pair will open its first casino in the former Portuguese colony tomorrow.
It’s the second major restructure since Packer inherited the company after his father’s death 17 months ago. In October he sold half the company’s media assets into PBL Media, a joint venture with buyout firm CVC Asia Pacific Ltd., to raise A$4.5 billion to fund the casino expansion.
Packer will be Executive Chairman of Melbourne-based Crown, with Rowen Craigie, head of Publishing and Broadcasting’s gaming unit, as chief executive. Publishing and Broadcasting CEO John Alexander will be executive chairman at Consolidated Media Holdings.
The media company will own the 50% stake in PBL Media, as well as Publishing and Broadcasting’s interests in pay TV networks Foxtel Management Pty., Fox Sports and Internet assets. About 65% of profits will come from high growth new media assets such as Seek Ltd., the nation’s biggest jobs site, and pay TV as Packer’s Nine TV network is losing viewers and advertising sales.
“Investors will have the opportunity to invest in a strong and growing pure play media company and also in a world class gaming company,” Packer said in the statement.
Packer’s family company, Consolidated Press Holdings Ltd., which owns 37% of Publishing and Broadcasting, will keep the same level of interest in the two new companies. Packer stands to reap A$754 million in cash from the transaction.
Shareholders will vote on the proposal at a meeting in August. Publishing and Broadcasting is being advised by UBS AG.