Packer’s gamble about to pay off

Packer's gamble about to pay off

A busy month ahead for billionaire James Packer

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 2, 2012 4:44 pm AEST

James Packer's move from media baron to gambling kingpin is almost complete. Mr Packer's Crown Limited (ASX: CWN) is expected to receive its long-awaited approval to increase its shareholding in Echo Entertainment Limited (ASX: EGP) to 25% by the end of this month.

Packer's move up Crown's share register could also continue this month. He currently holds 48% of Crown, and has steadily been acquiring shares. The six-month 'creep' period expires this month, as the billionaire last bought shares in the company on the 12th April. (Company law restricts major shareholders from acquiring more than 3% of a company every six months, unless they are making a takeover bid).

Crown, which already owns casinos in Perth and Melbourne, and a part share in a casino in Macau, is believed to be keen to gain influence or control of Echo's Sydney, Brisbane and Gold Coast casino licences.

Packer's move up Crown's share register may be dependent on his sale of his 50% holding in Consolidated Media Holdings (ASX: CMJ). Cons Media, as it's known, has received a $1.94 billion takeover bid from News Corporation (ASX: NWS), but needs approval from Seven Group Holdings (ASX: SVW) to proceed. Kerry Stokes' Seven Group holds 25% of Cons Media, but has yet to agree to the takeover.

Seven could also offer a competing bid for Cons Media, but is waiting on comments from the Australian Competition and Consumer Commission (ACCC). The ACCC has raised some concerns about Seven bidding for Cons Media, but has yet to make a formal decision.

The dominoes will fall quickly once the ACCC makes its call, especially if it declines to approve Seven's potential bid for Cons Media. If that's the case, Kerry Stokes is likely to sell his stake in the takeover target to News Corp. That would allow James Packer to exit his stake, and increase his Crown shareholding. At the same time we may see Crown move on Echo.

Foolish takeaway

It appears to be a busy month in gambling land, and James Packer will be keen to get his Cons Media assets out of the way, so he can concentrate on his casino empire, through Crown and Echo.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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