James Packer sells $1.7bn half stake in Crown

James Packer sells $1.7bn half stake in Crown

7 June 2019

Billionaire James Packer has sold almost half of his stake in casino giant Crown Resorts for $1.76 billion in a deal that is set to spark questions about whether it complies with the conditions of a licence with the NSW government.

Mr Packer’s private investment vehicle on Thursday night said it had sold about half its shares in Crown to the Hong Kong-based Melco Resorts & Entertainment, which runs venues in Macau and once had a joint-venture casino with Crown in the hugely popular Chinese gambling hub.

Crown entered into the agreement with Melco Resorts & Entertainment for a 19.99 per cent share in what forms the billion-dollar deal with the sale reflecting a price of $13 per share.

Melco, which is purchasing the shares from Mr Packer’s private investment company Consolidated Press Holdings, is run by Lawrence Ho, son of the gambling tycoon Stanley Ho, who once enjoyed a monopoly on gambling in Macau.

“I am thrilled Lawrence Ho and Melco have chosen to invest in Crown,” Mr Packer said.

“Crown’s resorts in Perth and Melbourne are world class entertainment destinations and I believe that Crown Sydney, much like Melco’s Morpheus property, will create an architectural icon for the city, the country and the world,” Mr Ho said.

Melco said it intended to pursue representation on Crown’s board once it obtains approval from gaming regulatory authorities across Australia, reports The Age.

The company also signalled it would be willing to increase its stake in Crown.

“Additionally, subject to obtaining requisite regulatory approvals, Melco welcomes the opportunity to increase its ownership in Crown,” Melco said in a statement to the Nasdaq stock exchange.

One regulatory issue could be a 2014 agreement with the NSW government which saw Crown promise it would prevent associations with Stanley Ho as a condition of its licence to establish its Barangaroo complex.

That included a clause saying: “Crown will ensure that it prevents… Stanley Huang Sun Ho or a Stanley Ho Associate from acquiring any direct, indirect or beneficial interest in Crown, a subsidiary of Crown.”

The agreement also bans any material deals between Crown and Stanley Ho or his associates and precludes Stanley Ho from holding certain roles with Crown.

Stanley Ho has faced allegations of links to organised crime which have long troubled gambling regulators in other jurisdictions. He has denied those allegations.

Mr Packer said, “Crown has been a massive part of my life for the last 20 years and that absolutely remains the case today – my continuing Crown shareholding represents my single largest investment. I am still vitally interested in Crown’s success as a world class resort and gaming business. The sale allows me to continue my long term involvement with Crown and at the same time to better diversify my investment portfolio.”

“I am thrilled Lawrence Ho and Melco have chosen to invest in Crown. Over the last 15 years Lawrence has built one of the world’s leading resort and gaming companies. Melco’s award winning resorts have set the standard internationally and are a testament to Lawrence’s vision and efforts. Crown is a stronger company with Lawrence and Melco as a strategic shareholder.”

The sale of about 20 per cent of Mr Packer’s shares leaves him with about a quarter of the company, worth about $2.3 billion. Sources close to Mr Packer said he would use the money from the sell-off to diversify his investment interests outside of the gambling sector, but would not be “rushing in” to do so.

The sale of Mr Packer’s shares comes at a critical time for the ASX-listed Crown Resorts, which is in the process of building a multibillion-dollar casino and hotel complex in Sydney’s Barangaroo, due for completion in 2021.