James Packer’s Crown Limited has sold its 10% stake in Sydney rival Echo Entertainment, possibly signaling approval is on the way for the company’s controversial bid to develop a competing resort casino in Australia’s largest city.
The announcement came not a week after Melbourne-based Crown got the OK from regulators in New South Wales to increase its holding in ASX-listed Echo, operator of Sydney’s Star casino, to 25%.
Echo and its Sydney monopoly have been in Crown’s sights since last year, when Crown applied for permission to buy more shares in what was seen as a potential takeover bid. Mr Packer did succeed at that time in ousting former Tabcorp boss John Story as chairman and replacing him with Australian businessman and sports executive John O’Neill. CEO Larry Mullin, an American, resigned a few months later and was replaced with another American, Las Vegas industry veteran John Redmond.
With Australia becoming increasingly attractive as a destination for Asian high rollers, Genting Group also cast a covetous eye on Echo, whose portfolio includes three casinos in the Australian state of Queensland. The Malaysian conglomerate holds about 5% of Echo through its Genting Singapore subsidiary and has applied to New South Wales to raise its stake above 10%.
Crown sold its 82.56 million shares for A$3.20 a share, a 7% discount to Echo’s close last Thursday, raising $264 million.
The company said in a statement that it wants to pursue its Sydney resort, proposed for the Barangaroo redevelopment district on Darling Harbour, free of any entanglements.
“Crown Sydney is a once-in-a-lifetime project for our company,” Mr Packer said. “We are working as hard as we can to make this goal a reality.”
The project has been controversial from the start, however, from its apparent flouting of the exclusivity of Echo’s license to the towering 250-meter height proposed for its hotel to the fact that it has been allowed to proceed without competitive bidding.
Across the harbor, meanwhile, Echo has applied for an extension of its monopoly beyond 2019 as part of a planned expansion of Star and a promise to invest elsewhere in Sydney.
New South Wales has emphasized that only one of the proposals can go forward—meaning that either Crown receives a second license or Echo remains Sydney’s sole casino operator—and has appointed an independent panel to assess the potential impacts and benefits of the Crown proposal.
