Casino mogul James Packer has successfully penetrated back into Australian casino operator The Star Entertainment Group, signaling the end of a four-year-old rivalry.
In a regulatory filing before the Australian Stock Exchange, The Star announced that investment company Ellerston Capital has increased its stake in the company, bringing its total bet to 5.07 percent.
Records showed that Packer, who owns Australian-listed casino operator Crown Resorts, have a 25 percent stake in Ellerston through his private investment Consolidated Press Holdings.
Ellerston claimed that Packer had no role in the company’s investment decisions even though it had been rumored last week that the casino billionaire snapped up Malaysian casino operator Genting’s stake in The Star, according to the Sydney Morning Herald.
It would be recalled that Genting had sold its 5.62% stake in The Star, netting a reported AUD233 million (US$180 million) in the process. The investment of Ellerston marks Packer’s return in The Star since he sold 10 percent holding in the said firm back in 2013.
Ellerston pointed out in its April newsletter that the continued influx of Chinese and South East Asian tourists in Australia trumps the decline of VIP activities. This, according to Ellerston, makes The Star an attractive investment option.
The investment fund also noted that The Star’s share prices is now in bargain.
“We see solid growth prospects for Star, driven by its capital investment program and growth strategy,” Ellerston said in its newsletter.
For many analysts, Crown’s entry in the Star may result in ‘synergies’ ranging from AUD85m to AUD135 million. Citi said in its note that Crown will reap the rewards of investing in The Star since the latter could fuel Packer’s casino earnings by as much as 22 percent.
Citi predicts that The Star will now be used to cater to the mass market while the in-development Crown Sydney will be Packer’s premium brand.
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