Australian tycoon Kerry Packer's Publishing and Broadcasting Ltd (PBL) has launched a AUS$686 million bid for Burswood Ltd, and said a successful takeover of the Western Australia casino operator would boost profits immediately. Shares in Burswood jumped 12% after PBL announced its AUS$1.40 a share cash bid late on Tuesday, hitting a high of AUS$1.44 before settling at AUS$1.41 in afternoon trade. Shares in cash-rich PBL gained 3.3% to AUS$12.37.
"It is cash flow and earnings accretive from day one," PBL chief executive Peter Yates told a conference call yesterday, adding that a winning bid would boost PBL earnings by 2% to 3%. PBL, controlled by Packer – Australia's richest man and a noted gambler – ranks as the country's second biggest media group and is also owner of glitzy Crown Casino in Melbourne. The group had been seen as a likely Burswood predator after it bought a 15.6% stake in the company about six months ago, and analysts endorsed its bid as a sound strategic play.
"PBL's Crown spits out more cash than God for the company. This acquisition will leverage off the great management team at Crown," said Sean Monaghan, an analyst with ABN Amro. Crown owns about 2,500 slot machines, compared with Burswood's 1,300 video gaming machines. Slot machines offer the fattest profit margins for casinos. Mr Yates said PBL wanted to develop Burswood into Asia's premier gaming and entertainment venue, targeting tourists from South-East Asia, mainly Singapore, Thailand and Indonesia. Burswood's high-roller unit, which accounts for about a sixth of its revenue, would help iron out the volatility in Crown's own high-stakes gaming business, he said.
SOURCE: Reuters.
