BURSWOOD shareholders will get a chance to have their say on new shareholder, Kerry Packer’s Publishing and Broadcasting Limited, when the gaming company holds its annual general meeting later this month.
BURSWOOD shareholders will get a chance to have their say on new shareholder, Kerry Packer’s Publishing and Broadcasting Limited, when the gaming company holds its annual general meeting later this month.
Shareholders will also be asked to formally approve changes to Burswood’s constitution, removing the 10 per cent cap on individual shareholdings.
This change was a critical factor in PBL’s decision to lift its stake in Burswood last week to 15.7 per cent.
Shareholder approval is considered a formality, following the passage of State legislation to change the shareholding cap and the board’s decision to support the change.
This would clear the way for PBL to launch a bid for full ownership of Burswood, though share market analysts believe this is not a foregone conclusion.
PBL chief executive Peter Yates has been playing down the prospects of a full bid.
“PBL has no current intention of increasing its stake in Burswood beyond the present level,” Mr Yates said.
Analysts agree that PBL is now in the driving seat and will be able to dictate the future ownership of the company, even if PBL itself does not bid.
Mr Yates said Burswood was a “strong fit with our existing gaming operation, Crown, in Melbourne”.
Broking firm Bell Potter has estimated PBL could extract about $20 million of pre-tax synergies from putting the two businesses together.
These would come from areas such as integrating the two ‘high roller’ businesses, which could enable it to reduce commission payments to players, as well as integrating head office functions and delisting Burswood from the Australian Stock Exchange.
Bell Potter State manager WA Andrew Coppin said the general consensus was that PBL was the only likely bidder, meaning little prospect of a bidding war.
Factors counting against a competing bid include the 40 per cent foreign ownership restriction, PBL’s blocking stake and the fact that PBL’s Crown Casino has the most synergy with Burswood.
Mr Coppin said PBL could afford to pay up to $1.34 per share and still make the acquisition earnings per share positive, although a bid could be at a lower price.
This compares with the $1.12 price at which PBL acquired a 14.2 per cent stake last week from Perth business executives Bill Wyllie and Jack Bendat, for a total consideration of $77 million.
Another market analyst said previous casino sales in Australia has been priced at about 10 times earnings before interest, tax, depreciation and amortisation.
Applying this formula to Burswood’s future earnings equates to a bid at about $1.25 per share.
Other market analysts believe a competing bid is still possible, with the most likely bidder being Melbourne-based Tabcorp, which owns Sydney’s Star City Casino and is finalising the acquisition of Queensland gaming company Jupiters.
Another possible bidder is Auckland-based Sky City, which owns casinos in New Zealand and Adelaide.
Burswood spokeswoman Julie Cameron said that, despite the ownership change, it was “very much business as usual”, with the hotel rolling out new branding last week to be known now as the Intercontinental Burswood.
