James Packer’s bid to take Crown Resorts private

James Packer has been working on a $4 billion deal to privatise Crown Resorts.

James Packer, Co-Chairman Melco Crown Entertainment Limited and Lawrence Ho, Co-Chairman and CEO Melco Crown Entertainment Limited at a Studio City press conference held at Studio City, Macau. Picture: Jonathan Ng

Billionaire casino magnate James Packer has not given up hope of privatising his Crown Resorts after talks fell over last month on a potential $4 billion deal with US private equity giant TPG that would see the Packer family exit the Australian sharemarket.

It is understood Mr Packer has held high-level talks with TPG about partnering on a buyout after the private equity giant had in the past expressed interest to the billionaire about such a deal.

TPG’s global principal, David Bonderman, is well known to Mr Packer and the pair are believed to have discussed other potential deals over many years that have not come to fruition.

Mr Packer was on the board of Qantas when it backed a privatisation of the airline by a private-­equity consortium backed by TPG.

Crown also held a high-level conversation last year with Chinese property giant Greenland about backing a potential privatisation.

Greenland was Crown’s partner in a failed bid to build a new ­casino resort development in ­Brisbane.

Any privatisation plan would only proceed with a deep-pocketed partner. It is understood Crown has also been discussing a scenario that would see its empire split in two.

A property company would hold its extensive network of ­casino resort properties in Australia, Macau and The Philippines and future properties in Las Vegas and potentially Japan.

A separate operating company would hold management rights for the companies.

None of these plans has been presented to Crown’s inde­pendent directors and none was discussed at Crown’s most recent regularly scheduled board meeting.

One source said yesterday a deal could be resurrected next year, including a potential partial privatisation of the group, but that nothing was imminent.

Mr Packer’s most trusted legal adviser, Guy Jalland, is believed to have returned to Australia last week from his home in the Caribbean, but left the country again earlier this week.

Mr Packer already controls 53.1 per cent of the $7.9bn listed Crown Resorts, which owns ­casino and hotel complexes in Melbourne and Perth and is ­developing the $1.5bn Crown Sydney complex at Barangaroo on Sydney Harbour.

The latest talks for a privatisation, which was also considered during the GFC, come as Crown shares have traded as low as $9.80 in the past year as its Asian gaming joint venture Melco Crown has come under pressure from a slump in Macau gaming revenues.

Before the talks were revealed yesterday the stock was trading at $10.90.

News of a possible buyout sent Crown shares soaring to as high as $12.23 before closing at $11.77.

Mr Packer’s stake in Crown Resorts is worth $4.55bn and is controlled by his private company Consolidated Press Holdings.

Consolidated Press Holdings recently increased its stake in Crown by 3 per cent at a cost of $260 million under the creep ­provisions of the Corporations Law via the use of a derivate product provided by UBS.

A range of institutions sold into the UBS purchase of Crown stock for Mr Packer, including Perpetual, which is Crown’s biggest institutional shareholder with a stake just below 5 per cent.

The privatisation deal has been worked on by long-time Packer confidant Matthew Grounds from investment bank UBS.

It has been reported that Crown is taking advice from Deutsche Bank.

Presentation of any proposal to the 13-member Crown board would see the independent directors consider the deal separately on behalf of minority investors.

The directors, who include adman Harold Mitchell, former Qantas chief executive Geoff Dixon and former AFL chief executive Andrew Demetriou, would engage their own advisers on the deal as well as seek an independent expert report.

To gain full ownership of the company, Mr Packer would need to convince owners of the 46.9 per cent of shares that he doesn’t own of the merits of his offer.

Only 80 investors, including Mr Packer, have more than 100,000 Crown shares, while fewer than 1000 investors have parcels of between 10,000 and 100,000 shares, with the thin register meaning that the logistics of an offer would be relatively streamlined.

Crown chairman Rob Rankin, who also runs Consolidated Press Holdings, could not be reached for comment.

CPH spokesman Mark Arbib declined to comment.

Perpetual also declined to ­comment.

Overseas, the listed Crown also owns and operates the Crown Aspinall’s casino in London and has one third of Melco Crown, which operates casino complexes in Macau including City of Dreams and the just opened Studio City complex.

Melco Crown is co-owned by Mr Packer with Chinese billionaire Lawrence Ho.

Mr Packer recently stepped down as chairman of Crown Resorts in favour of a lesser executive directorship of the company, handing over the chair to the chief executive of his private company, former investment banker Rob Rankin.

The billionaire now spends little time in Australia, maintaining a home in Los Angeles where his three children to model ex-wife Erica Baxter now live.

He is also building a home in the Israeli capital Tel Aviv close to that of his friend and Israeli Prime Minister Benjamin Netanyahu.

This year Mr Packer has also begun a relationship with pop diva Mariah Carey.

He recently settled the division of his late father Kerry Packer’s estate with his sister Gretel in a deal that was believed to be worth more than $1.25bn. Ms Packer retains a residual interest in the CPH vehicle.

A privatisation would come at an opportune time, with the Crown share price under pressure over the past year.