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Australia's Packer steps up attack in battle for casino rival Echo
June 5, 2012 / 6:32 AM / 6 years ago

Australia's Packer steps up attack in battle for casino rival Echo

* Packer’s Crown urges Echo shareholders to remove chairman Story

* Places full-page newspaper ads blasting Echo’s financials

* Echo maintains Crown trying to gain control without paying up

By Victoria Thieberger

MELBOURNE, June 5 (Reuters) - Australian billionaire James Packer has turned up the heat in his battle to increase control over rival casino operator Echo Entertainment by taking out full-page newspaper ads lambasting Echo’s financial performance as he seeks to sack the chairman.

Packer, who has stakes in casinos in Australia, London and Macau, wants to use Echo’s Sydney licence to build a new hotel and casino complex in Sydney to attract more Asian high-rollers.

Packer’s tactics have been to try to boost his company Crown Ltd’s 10 percent stake in Echo and win a board seat, without launching a full takeover that could cost more than A$3 billion ($2.9 billion) and would face tough regulatory scrutiny.

The friction between Australia’s fourth-richest person and Echo, which runs Jupiters casino on Queensland’s Gold Coast and Sydney’s Star casino, started when Crown doubled its stake in Echo in February and said it would seek state approvals to raise it further.

Crown has placed a series of full-page ads in Australian newspapers, urging Echo shareholders to vote to remove Chairman John Story at a special meeting on July 20.

“Echo’s performance is costing shareholders,” the latest advertisement said on Tuesday, saying the company has suffered a long period of underperformance under Story.

Echo’s shares have surged 19 percent this year, against a flat broader market, on takeover speculation.


Crown’s hardball tactics depend initially on winning more than 50 percent support at the July meeting to oust Story as chairman, but Echo’s institutional shareholders may be reluctant to cede some control without receiving a premium.

Crown owns casinos in Melbourne and in Perth, and about a third of Melco Crown Entertainment which has casinos in Macau. It wants Echo’s casino licences in Sydney and the Gold Coast because they are more likely to attract Asian high-rollers than Melbourne and Perth.

Even if the July vote fails, Echo shareholders doubt the determined billionaire, whose wealth is estimated at $4.5 billion by Forbes, will be dissuaded.

“Even if Packer doesn’t get traction with this motion, I don’t think that is the end of it,” said Angus Gluskie, portfolio manager at White Funds Management, which owns shares in both Echo and Crown and has A$350 million in funds under management.

“We are likely to see continued agitation and a real push there with a longer-term agenda to operate that business with Crown to extract synergies, maybe without formally putting the two companies together,” he said.

Echo plans to deal directly with shareholders in response to Crown’s moves and advertising campaign, a spokesman said.

“It will be a very clear message that Crown is a direct competitor of Echo... and Crown is trying to gain effective control of Echo without paying a premium,” the spokesman said.

The New South Wales (NSW) gaming regulator said it would liaise with a large number of regulators locally and overseas in deciding whether to allow Crown to go beyond 10 percent of Echo.

Spokesmen for the NSW and Queensland regulators declined on Tuesday to say how long a decision would take. (Editing by Muralikumar Anantharaman)

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