The chair of New Zealand’s SkyCity Entertainment Group says the company will seek proposals from any parties interested in acquiring the entire business by way of a structured process that will include providing relevant due diligence information.
Addressing shareholders at the company’s Annual General Meeting in Auckland on Wednesday morning, Julian Cook explained that SkyCity wanted to gauge the true value to shareholders from continued interest in the business and that the Board of Directors would carefully consider any acquisition proposal if it was seen as a viable alternative to the current growth strategy.
As previously reported by IAG, SkyCity earlier this year rejected two takeover bids because it did not believe those proposals reflected the underlying value of the company.
In Wednesday’s address, Cook said SkyCity has not received any further improved proposals since then, nor non-binding whole-of-business proposals from anyone new, but explained that the board remains aware of continued interest in the whole business.
“In the interests of shareholders, the Board has decided to seek proposals through a structured process,” he revealed. “This will involve engaging with interested parties and giving them access to some due diligence information to help them develop their proposals. UBS and Chapman Tripp have been appointed as investment banking and legal advisers, respectively, for this process.
“The Board remains confident that our current strategy is robust. However, if a proposal emerges that does deliver greater value for shareholders than that strategy, the Board will consider it carefully. We are now establishing the structure for this process, which will take some time to progress.”
Cook made it clear that there is no guarantee the structured process will result in any new offers or a sale.
Online options
Also addressing shareholders at SkyCity’s AGM was CEO Jason Walbridge, who spoke of the company’s bid to acquire two online casino licenses for the domestic market and outlined the deliberate decision to lower its target from the three licenses it had sought initially.
SkyCity owns two of the 11 entities that were last week approved by New Zealand’s Department of Internal Affairs to officially apply for licenses.
Confirming that SkyCity is now preparing its license applications, Walbridge said, “The auction settled at a price within the scenarios we modelled, and we are confident we can achieve the appropriate return on the capital invested.
“It was a deliberate capital allocation decision to reduce from the maximum three allowable licenses to two, ensuring we remained within our risk-adjusted return on capital targets.”
The SkyCity CEO also outlined his belief that the SkyCity brand, and ability to cross-market between its land-based and online offerings, would give the company a competitive edge – although he warned that the level of advertising in a competitive regulated market would be watched closely.
“Regulating this market means only licensed operators will be permitted to offer online casinos; if licensed, we will be two of the fifteen brands, with everyone adhering to the regulations ensuring a level playing field,” Walbridge said.
“We believe we can compete strongly in this important market. Being a land-based casino operator for 30 years, we have a brand New Zealanders know and trust, which is the most important attribute of online brands, and we will now be able to advertise and market our online presence, which we haven’t been able to before.
“Importantly, we clearly understand the New Zealand host responsibility and AML requirements, as they are similar or the same across land and online. We do expect this to be a competitive market, and the level of potential advertising when the market goes live in the second half of FY27 is something we will be watching closely.”
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