Packer's Gamble About to Pay Off


SYDNEY -- James Packer's move from media baron to gambling kingpin is almost complete. Packer's Crown Limited (ASX: CWN.AX) is expected to receive its long-awaited approval to increase its shareholding in Echo Entertainment Limited (ASX: EGP.AX) 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.AX). Cons Media, as it's known, has received a $1.94 billion takeover bid from News Corporation (ASX: NWS.AX) but needs approval from Seven Group Holdings (ASX: SVW.AX) 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; it's 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.

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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