Burswood seen as casino prey


MELBOURNE: Australia’s multi-billion dollar gambling industry could see another takeover after September when a share ownership restriction on hotel and casino operator Burswood Ltd is lifted. 

Gaming groups in the country are under pressure to expand through mergers and acquisitions as state-imposed smoking bans at gaming venues and increased public calls for more stringent regulation of slot machines have slowed growth in their existing operations. 

Shares in Perth-based Burswood have been buoyed in recent trade, driven mainly by takeover speculation spawned in part by the company’s profit woes. 

“The continued poor operating performance of the group is making it a target for consolidation,” said Troy Angus, a portfolio manager with BT Financial Group. 

Media mogul Kerry Packer’s Publishing and Broadcasting Ltd (PBL), which owns Crown Casino here, is considered Burswood’s most likely predator. 

In early May, Burswood warned that its current full-year earnings would slide around 30% from a net profit of A$20.6mil in 2001/02 as Asian high-rollers, who account for about a fifth of the casino’s revenue, stayed at home due to the Iraq war and the Severe Acute Respiratory Syndrome (SARS) epidemic. 

Broker J.B. Were values Burswood at between 60 cents and A$1.09 a share or A$528mil at the top end, which Neil Wesley, a fund manager at Portfolio Partners, said was in line with the estimates of other analysts. 

Analysts consider PBL a likely buyer as Burswood would give it a way to expand its high-roller business. PBL has declined to comment on any interest in Burswood. 

“PBL may consider Burswood an attractive asset as it can reap synergies from Burswood’s high-roller business,” Wesley said. 

J.P. Morgan analyst Mark Wilson said PBL could make savings of around A$10mil to A$15mil if it bought Burswood by consolidating offices and cutting administrative costs. 

But Packer, known for making acquisitions mainly where the target is distressed, is likely to wait for Burswood shares to become cheaper before launching a bid, according to J.B. Were analyst Matthew Reynolds. 

New Zealand’s Sky City Entertainment, which owns and operates the only casino in Auckland, has also been named as a potential buyer of Burswood.  

But some analysts said that Sky would not be able to afford such a purchase. – Reuters 

 

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